The European Markets Infrastructure Regulation (EMIR) (EU) No. 648/2012 on OTC entered in vigor on August 16th of 2012 is an EU Regulation on OTC derivatives, central counterparts and trade repositories which has been adopted for the optimization of transparency in derivative markets. The Regulation was inspired by the G20 commitments as agreed upon in Pittsburgh back in September of 2009.
The fundamental provisions of EMIR are the following:
- Obligation of reporting for derivatives contracts;
- Obligation of reporting for all derivatives transactions to trade repositories (TRs);
- Obligation of clearing for OTC derivatives and risk mitigation techniques for non-cleared OTC derivatives, including obligations of non-financial countrparties (NFC);
- Introduction of organizational conduct of business and prudential standards for trade repositories (TRs) as well as central counterparts (CCPs).
Furthermore, for the detailed listing and implementation of the provisions of EMIR, the European Securities and Markets Authority (ESMA) was assigned to draft the Regulatory and Implementing Technical Standards. EMIR has empowered the EU Commission to adopt delegated and implementing acts in order to provide clarifications of compliance with the Regulation, for the competent authorities, as well as the market participants. In fact, following the reviews of 2015 and 2016, the Commission suggested the first amendments to the Regulation in May of 2917, which was approved and introduced as of June 17th of 2019 as Regulation (EU) 2019/834 or the Emir Refit. Following the aforementioned amendment, the Regulation was once again enhanced regarding the terms concerning third country CCPs and the supervision of EU CCPs, with the adoption of EMIR 2.2., officially called Regulation (EU) 2019/2099 which was published in the Official Journal of the EU on December 12th of 2019 and entered in vigor on January 1st of 2020.
Finally, on November 21st of 2022, the European Securities and Markets Authority (ESMA), who is the EU’s financial markets regulator and supervisor, proposed an amendments of the the regulatory technical standards (RTS) with regards to the Settlement discipline, for the simplification of the cash penalties process. According to the new proposal, the separate process of the CCP transactions for the collection and the distribution of cash penalties for settlement fails on cleared transactions, as it was previously established in Article 19 of the RTS, would be removed and replaced by Articles 16,17 and 18, which would delegate the entire process of collecting and distributing all penalties, both cleared and uncleared, to the CSDs.
The amendments’ draft has been sent for endorsement to the EU Commission in the form of a Commission Delegated Regulation, following which it shall be subject to the non-objection vote of the European Parliament and the Council.
The present article is for informational purposes only and does not, under any circumstances, constitute legal advice. For further information on the subject, please contact our law firm and one of our attorneys shall be glad to assist you.
Nika Kalifatidou
Advocate – Legal consultant
Arsen Theofanidis LLC