The European Markets Infrastructure Regulation (EMIR): Risk Mitigation Heightens

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On the 4th of July 2012, the European Parliament and the Council adopted the European Markets Infrastructure Regulation (‘EMIR’) which requires:


  1. All derivative contracts to be reported to an authorised or recognised trade repository (‘Reporting Obligation’);
  2. Certain classes of OTC Derivative contracts entered into by Financial Counterparties and Non-Financial Counterparties to be centrally cleared through an authorised or recognised Central Counterparty (‘Clearing Obligation’); and
  3. Counterparties to apply certain risk mitigation measures when entering into non-cleared OTC Derivative contracts (‘Risk Mitigation Techniques’).


EMIR introduces provisions to increase transparency, establish common rules for central counterparties and for trade repositories and to reduce the risks associated with the OTC derivatives market. The Regulation provides for obligations to centrally clear OTC derivative contracts and to apply risk mitigation techniques to uncleared swaps such as the exchange of collateral. These obligations are applicable in a number of circumstances including in respect of certain OTC derivative contracts between two entities established in one or more third countries that would be subject to the clearing obligation if they were established in the EU, so long as the contract has a direct, substantial and foreseeable effect within the EU or where such an obligation is necessary or appropriate to prevent the evasion of any provisions of EMIR.

On the 13th September 2013, the Commission Delegated Regulation (EU) No 876/2013 of 28 May 2013 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to Regulatory Technical Standards on Colleges for Central Counterparties was made public on the Official Journal of the European Union. This implies that the aforementioned Technical Standards will enter into force on the 11th October 2013.

ESMA’s timeline for the implementation of EMIR, dated 5th July 2013 indicated that the earliest possible date for the commencement of the Reporting Obligation to Trade Repositories was the 1st January 2014.

The Reporting start date depends on the first registration of a Trade Repository. ESMA now foresees that this decision will not take effect prior to the 7th November 2013. Consequently, counterparties’ reporting to trade repositories is not expected to start before the 12th February 2014.