December 3, 2015

Confirmed Start Dates for Clearing Under EMIR

Abigail Bell, Richard Frase, Simon Wright

Dechert LLP

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Commission Delegated Regulation (EU) 2015/2205 (the “Regulation”) supplementing the European Markets Infrastructure Regulation (“EMIR”) was published on 1 December in the Official Journal of the European Union.

The Regulation covers the clearing of EUR, GBP, JPY and USD denominated basis and fixed-to-floating interest rate swaps; as well as EUR, GBP and USD denominated forward rate agreements and overnight index swaps.

The Regulation will enter into force 20 days from publication (21 December 2015), with the clearing obligation itself coming into effect, as follows:

21 June 2016: “Category 1” entities - clearing members of at least one of the classes of OTC derivatives set out in the Regulation, of at least one of the Central Clearing Counterparties authorised or recognised before that date to clear at least one of those classes of OTC derivatives.

21 December 2016: “Category 2” entities - 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 for January, February and March 2016 is above EUR 8 billion and which are any of the following:

(i) financial counterparties¹; or

(ii) alternative investment funds as defined in the Alternative Investment Fund Managers Directive that are non-financial counterparties.

21 June 2017: “Category 3” entities - counterparties not belonging to Category 1 or Category 2 which are any of the following:

(i) financial counterparties; or

(ii) alternative investment funds as defined in the Alternative Investment Fund Managers Directive that are non-financial counterparties.

21 December 2018: “Category 4” entities - non-financial counterparties² that do not belong to Category 1, Category 2 or Category 3.

Footnotes

1) “Financial counterparty” here has the meaning in EMIR – investment firms authorised under MIFID, credit institutions authorised in accordance with the Banking Consolidation Directive, insurance undertakings authorised in accordance with the First Non-Life Directive, assurance undertakings authorised in accordance with the Recast Life Directive, reinsurance undertakings authorised in accordance with the Reinsurance Directive, UCITS funds and their managers authorised in accordance with the UCITS IV Directive, institutions for occupational retirement provisions (IORPS), as defined in the Occupational Pension Funds Directive and alternative investment funds managed by alternative investment fund managers authorised or registered in accordance with the Alternative Investment Fund Managers Directive.

2) “Non-financial counterparty” here has the meaning in EMIR - any entity established in the EU which is not a financial counterparty.

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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.