EMIR Refit – ESMA clarifications on scope, live expected target date end of May 2019 has been saved
EMIR Refit – ESMA clarifications on scope, live expected target date end of May 2019
29 Mars 2019
Regulatory News Alert
Context and objectives
After a series of negotiations on the EMIR Refit (Regulatory Fitness and Performance ) proposal, a political agreement was reached on 5 February 2019 between the European Parliament and EU member states on the targeted EMIR reform, to address disproportionate compliance costs, transparency issues and insufficient access to clearing for certain counterparties.
Following this agreement, it is thus reasonable to expect that the final Refit text could be adopted and published in the Official Journal as early as May 2019 and thus could enter into force as early as end of May 2019, i.e. 20 days after its publication.
Clearing obligations under Refit regime
EMIR Refit includes a new regime to determine when financial and non-financial counterparties are subject to the clearing obligation, depending on whether their positions exceed certain thresholds (as defined by asset class and set in Commission Delegated Regulation No 149/2013).
In accordance with the ESMA statement published on 28 March 2019, counterparties can choose whether or not to conduct the calculation in order to establish if they are subject to Refit clearing obligation.
In this regard, ESMA clarifies that counterparties will be required to clear their OTC derivative positions and immediately notify ESMA and the relevant competent authority if:
- They choose not to do timely calculations once Refit enters into force
- The result of that calculation exceeds the clearing thresholds
Implications for entities in scope
As Refit, in its currently proposed form, does not include a delayed implementation of the new regime, counterparties choosing to conduct the calculation would need to have the results by the day of Refit entering into force, i.e. potentially as early as end of May.
From the day of the first calculation onwards, counterparties taking positions in OTC derivative contracts and choosing to calculate their aggregate month-end average position are required to conduct that calculation every 12 months.
How Deloitte can help you?
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