European Market Infrastructure Regulation (EMIR)

On 16 August 2012, a regulation on the European market infrastructure (EMIR) entered into force. The aim of this regulation is to improve transparency and to reduce risks related to derivatives markets. EMIR is binding in its entirety and directly applicable in all EU Member States.

    

EMIR applies to all financial (e.g UCITS and, where relevant, their management companies, credit institutions, investment firms, insurance companies, etc.) and non-financial (e.g. securitisation vehicles, professionals of the financial sector, corporates, etc.) counterparties. Moreover, it applies indirectly to non-European counterparties trading with European counterparties.

    

EMIR lays down:

  

  • the obligation for all financial and non-financial counterparties exceeding the clearing threshold to clear all OTC derivative contracts pertaining to a class of OTC derivatives subject to the clearing obligation in an authorised or recognised central counterparty (CCP);
  • the reporting obligation for all OTC derivatives to a trade repository;
  • requirements for risk-mitigation techniques for contracts not cleared by a CCP;
  • common organisational standards and conduct of business and prudential rules for CCPs;
  • organisational standards and conduct of business rules for trade repositories.