Regulation on OTC derivatives, central counterparties and trade repositories

Following some uncertainty in early February 2013 in respect of whether the European Parliament would object to certain EMIR regulatory technical standards, it finally accepted the six draft standards and they entered into force on 15 March 2013.

The six RTS relate to: (i) Trade repositories (including the minimum details of the data to be reported to trade repositories and the data to be published and made available by trade repositories); (ii) Capital and other requirements for central counterparties (CCPs); (iii) Risk mitigation techniques for OTC derivatives contracts not cleared by a CCP (other than collateral requirements - as to which see further below), indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue and non-financial counterparties (NFCs).

Upon entry into force, some of the RTS apply immediately (for example, those relating to timely confirmation - pursuant to which financial counterparties (FCs) and NFCs must confirm OTC derivative transactions within certain prescribed time frames and FCs must have procedures in place to report on a monthly basis the number of OTC derivative transactions that have been outstanding for more than five business days - and mark-to-market valuation - pursuant to which FCs and NFC+s are required to value outstanding OTC derivative contracts on a daily basis). However, it is worth noting that the European Commission EMIR FAQs published on 8 February 2013 recognise that it may not be possible to effect timely confirmations immediately and so Member States will be given some flexibility in respect of how this RTS will be applied - at least initially…

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