March 18, 2014

The Clock Starts Ticking Towards European Mandatory Clearing | OMX Authorised

The clock starts ticking towards mandatory clearing in Europe.

If you haven't already heard, Nasdaq OMX announced they are the first European CCP to be authorised under EMIR – something they're quite happy about, you can read the press release here from this page here. Whilst this is good news for OMX, it means the EMIR process now starts moving forward towards mandatory clearing, something the US have already experienced. The sequence works like this:

  1. Authorisation of the first CCP: today
  2. Notification for the clearing obligation: tomorrow
  3. ESMA to publish recommended technical standards (RTS) on the clearing obligation (in other words which products would they like to see cleared): #2 + 6 months = September 2014
  4. The draft RTS will need to be endorsed by the European Commission (1-3 months): Max = December 2014, Min = October 2014
  5. The draft RTS will need a non-objection by the European Parliament and the Council (1-3 months): Max = March 2015, Min = November 2014
  6. The actual date of application of the clearing obligation will depend on the date of entry into force of the RTS and the expected phase-in period per type of counterparty, to be defined in the RTS: Anyone's guess

So being conservative the longest time period could be from now to March next year, plus any phase-in period. The shortest time period would be from now to November 2014, plus any phase-in period. My own opinion is that the actual mandated products are very likely to be a subset of those already cleared now, and given that ISDA reported 90% of clearable business is already cleared, the transition is likely to hit smaller firms who have yet to take up clearing.

Meanwhile as we wait for CCPs to be authorised, their segregation models will become evident to Clients, for instance the OMX models are here, and a more comprehensive set of links can be found at this previous article:

If your firm isn't already clearing – get in touch for more guidance on how to choose a CCP, how to get setup operationally, and the benefits of early clearing, the time to start is probably now.


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