European Markets Infrastructure Regulation


In recent weeks, ESMA has published additional Q&A, authorised 2 additional central counterparties under EMIR (Regulation 648/2012 on OTC Derivatives, central counterparties and trade repositories) and is engaging with the European Commission to ease certain frontloading requirements regarding the clearing obligation.

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Updated Q&A - 9th edition

On 23 June 2014, the European Securities and Markets Authority (ESMA) published the 9th updated Q&A on EMIR implementation.

The newly added questions provide guidance on the following topics:

  • Reporting of collateral (TR question – 3a)
  • Reporting of valuations (TR question – 3b)
  • Reporting of outstanding positions following the entry into force of EMIR (Backloading) (TR question -4)
  • Reporting to TRs – empty fields (TR question - 20)
  • Reporting valuations of swaps on structured products (TR question 32) 
  • Collateralisation field (TR question -33)
  • Contracts with no maturity date (TR question – 34)
  • Notional Amount field (TR question - 35)
  • OTC Derivatives Novations (TR question -36)
9th edition of Q&A on EMIR implementation

Central counterparties

On 12 June 2014, ESMA authorised a further 2 CCPs to offer services and activities in the Union in accordance EMIR. With the authorisation of European Commodity Clearing (Germany) and LCH.Clearnet Ltd (UK), there are now eight CCPs authorised under EMIR.  

In a similar vein, on 10 June 2014 ESMA has published a non-exhaustive list of 37 CCPs established in non-EEA countries which have applied for recognition under Article 25 of EMIR. It includes CCPs established around the world, including South Africa, Japan, Hong Kong, New Zealand, Switzerland, Singapore, Canada, India, Israel, Dubai, the US, Korea, Malaysia, Brazil, Mexico and Australia. ESMA states that the list remains subject to further update.

Frontloading clairification

ESMA has written to the European Commission outlining its intention to ease certain “frontloading” requirement under EMIR, and requested its views on the proposals.

The frontloading requirement relates to the clearing obligation, whereby contracts must be cleared through a CCP. The clearing obligation began to apply with the authorisation of the first EU-based CCP on 18th March 2014. ESMA was required by EMIR to draft technical standards defining the clearing classes subject to central clearing within 6 months of the first CCP’s authorisation. Compulsory central clearing will only start with the entry-into-force of the technical standards, which creates the need to ‘frontload’ those derivate trades since 18 March 2014.

ESMA believes that the frontloading procedure creates uncertainties for derivatives end-users while the exact terms of the clearing obligation has not been defined which could have adverse impacts on risk hedging and financial stability. ESMA will outline possible solutions in a public consultation paper which will be released prior to the finalisation of the draft regulatory technical standard on the clearing obligation.

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