ESMA Publishes Clearing Obligation CP for Additional IRS Classes

Orrick - Finance 20/20
Contact

On May 11, ESMA published a consultation paper (CP) on the clearing obligation for additional classes of interest rate derivatives, including fixed-to-floating interest rate swaps denominated in Czech Republic koruna (CZK), Danish krone (DKK), Hungarian forint (HUF), Norwegian krone (NOK), Swedish krona (SEK) and Polish zloty (PLN), as well as forward rate agreements (FRAs) denominated in NOK, SEK and PLN.

The CP follows the publication of clearing obligation CPs for interest rate derivatives classes, credit derivatives classes and foreign-exchange non-deliverable forward (NDF) classes, the publication of a final report on the clearing obligation for certain interest rate derivatives classes, and a feedback statement on NDF classes.

The draft RTS includes the following classes of derivatives:

  • fixed-to-floating CZK, DKK, HUF, NOK PLN swaps with maturities of up to five years;
  • fixed-to-floating SEK swaps with maturities of up to 15 years;
  • NOK and PLN-denominated FRAs with maturities of up to one year;
  • SEK-denominated FRAs with maturities of up to two years.

The CP does not address the issue of third-country entity intragroup transactions. ESMA states in paragraph 184 of the CP that, at the time of publication, it is not yet known how a provision related to the application of intragroup transactions concluded with third-country entities will be treated in the first RTS on the clearing obligation (for G-4 currencies). This aspect is therefore not addressed in the current CP/draft RTS.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick - Finance 20/20 | Attorney Advertising

Written by:

Orrick - Finance 20/20
Contact
more
less

Orrick - Finance 20/20 on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide