EMIR – ESMA Recommendations to EMIR Framework, Final Rules on Central Clearing for Interest Rate Derivatives and Consultation on CCP Client Accounts

EMIR framework: On 13 August, ESMA published a number of recommended changes to the EMIR framework.

Three of the reports are required under Article 85 of EMIR, and cover non-financial counterparties (NFCs), pro-cyclicality and the segregation and portability for CCPs. The fourth report responds to the European Commission’s ( the “Commission”) review including recommendations on amending EMIR in relation to the clearing obligation, the recognition of third country CCPs and the supervision and enforcement procedures for trade repositories.

Read "ESMA's Press Release "ESMA recommends changes to EMIR framework" (13 August 2015).

Read EMIR Review Report no.1 "Review on the use of OTC derivatives by non-financial counterparties".

Read EMIR Review Report no.2 "Review on the efficiency of margining requirements to limit procyclicality".

Read EMIR Review Report no.3 "Review on the segregation and portability requirements".

Read EMIR Review Report no.4 "ESMA input as part of the Commission consultation on the EMIR Review".

Central clearing: On 24 August, the Commission published the final text of a regulation supplementing the regulatory technical standards (“RTS”) applicable to the clearing obligation under EMIR.

The regulation lays down the classes of the OTC derivative contracts that are subject to the clearing obligation, and the four different categories of counterparties for which different phase-in periods for clearing apply.

As set out in Annex 1 to the regulation, the following types of OTC derivative are subject to clearing:

• Fixed-to-float interest rate swaps
• Float-to-float swaps or “basis” swaps
• Forward rate agreements
• Overnight index swaps

Counterparties fall into four categories:

Category 1 - counterparties who are clearing members for at least one of the classes of OTC derivatives set out in Annex I, of at least one of the CCPs authorised or recognised before that date to clear at least one of those classes.

Category 2 - counterparties not belonging to Category 1 which belong to a group whose aggregate month-end average of outstanding gross notional amount of non-centrally cleared derivatives is above EUR 8 billion and which are any of the following (within the meaning of EMIR):

(i) financial counterparties;

(ii) alternative investment funds as defined in the AIFMD that are non-financial counterparties;

Category 3 - counterparties not belonging to Category 1 or Category 2 which are any of the following:

(i) financial counterparties;

(ii) alternative investment funds as defined in the AIFMD that are non-financial counterparties;

Category 4 - non-financial counterparties that do not belong to Category 1, Category 2 or Category 3.

Read the press release: "Financial stability: new Commission rules on central clearing for interest rate derivatives" (6 August 2015).

Read the full regulation. 

Read the annex.   

CCP Client Accounts: ESMA published a discussion paper on 25 August 2015, reviewing EMIR standards applicable to central clearing counterparty (“CCP”) client accounts, specifically the liquidation period for various types of financial instruments.

Read ESMA's discussion paper: "Review of Article 26 of RTS No 153/2013 with respect to client accounts". 

Read the press release: "ESMA consults on review of EMIR standards relating to margin period of risk for CCPs" (26 August 2015). 

MiFID - Pre-trade Transparency Waivers

ESMA clarified its position on four types of pre-trade transparency waivers, as permitted under MiFID on 26 August.

ESMA has endorsed the position taken by its predecessor, CESR, and has published a number of examples of permitted practice.

Read ESMA’s full position.

Central Securities Depositories Regulation

ESMA published its technical advice to the Commission on the implementation of the CSD regulation on 5 August 2015. 

Key recommendations made were made on the level of penalties for settlement fails, and the substantial importance of a CSD for the functioning of the securities markets.

Read ESMA's report: "Technical Advice under the CSD Regulation". 

Read the press release: "ESMA advises Commission on implementation of CSD Regulation" (5 August 2015).