EMIR Refit to enter into force on 17 June: Why are you concerned?

28 May 2019

Regulatory News Alert

The amended Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019, Regulation (EU) No 648/2012 (Refit) was published in the Official Journal today.

As previously stated, the published Refit text does not include a delayed implementation of the new clearing regime. The new regime will therefore apply as soon as the Refit text comes into force on Monday 17 June 2019.

As a result, financial and non-financial counterparties taking positions in OTC derivative contracts and choosing to calculate their aggregate month-end average position for the previous 12 months (in order to determine if they are subject to clearing obligations), would need to have the results of such calculation on the day the Refit is actioned.

This also means that all financial and non-financial counterparties that do not calculate their OTC derivatives position, or where the result of that calculation exceeds any of the clearing thresholds, are required to immediately notify ESMA and their relevant competent authority on the 17 June at the latest. Counterparties will become subject to the clearing obligation for the OTC derivative contracts entered into, or novated, from four months following that notification.

In addition, ESMA has published today updated EMIR Q&A in order to provide further clarifications on the implementation of the Refit framework.

Other important changes introduced by Refit:

  • Extended definition of financial counterparties (FC) to capture EU AIFs and their EU AIFMs
  • FC to report derivative transactions on behalf of non-financial counterparties (NFCs)
  • Exemption from reporting obligations for intragroup transactions where one counterparty is a NFC
  • End of backloading requirement
  • Introduction of so-called “small FCs” which are exempt from clearing obligations (although still subject to the margin requirements for uncleared OTC) 
  • For NFC+, clearing is limited to the asset class(es) for which the threshold is exceeded
  • End of frontloading requirement
  • Extension of the clearing exemption for risk-reducing transactions of pension schemes
  • Power for ESMA and the Commission to suspend the clearing and derivatives trading obligation
  • Regulators to validate risk management procedures for the exchange of collateral
  • Obligation to provide clearing services on fair, reasonable, non-discriminatory, and transparent terms.


How can Deloitte help you?

Since its enforcement, we have been helping our clients to comply with EMIR provisions by providing assistance on activities ranging from strategic considerations, to the full implementation of its requirements.

Deloitte Luxembourg EMIR Services can help your organization analyze any current gaps by implementing regulatory health checks, proposing remediation plans, and defining an appropriate governance framework (contracts, risk management, and control).

Deloitte Luxembourg can help you in your reporting with its specific facility for EMIR, MIFIR and upcoming SFTR.

With our RegWatch service, Deloitte helps you stay on top of regulatory news while preparing your organization to address future regulatory developments.

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Benoit Sauvage
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