Frances Faulds
Frances Faulds

Discussing EMIR - FX meets the obligations and seeks the benefits

The European Market Infrastructure Regulation (EMIR) establishes the clearing and reporting obligations for all listed and OTC derivatives. With reporting for credit and interest rates derivatives starting in August 2013 and FX derivatives trades reporting expected to go live in January 2014, Frances Faulds looks at how market participants are gearing up and the choices facing the FX market today.

If 2012 was the year of the Dodd-Frank Act, 2013 looks set to be the year of EMIR. The European Securities and Markets Authority (ESMA) has now published its technical standards for the regulation of OTC derivatives, central counterparties (CCPs) and trade repositories (TRs), which set out the specific details of how EMIR’s requirements are to be implemented. The EMIR requirements can be divided into three main categories: the obligation to clear standard derivatives; risk mitigation techniques for OTC derivatives not cleared by a CCP; and reporting. All financial and certain non-financial counterparties, whose non-hedging activity exceeds the clearing thresholds as respectively defined by ESMA, will be obliged to clear by a CCP those derivatives contracts they enter into that are included in the Public Register of derivatives contracts that will be maintained by ESMA. The Public Register will include a list, which ESMA will publish, of those contract types that are accepted to be cleared by a CCP...continued

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