A Commission Implementing Decision declaring equivalence of the US legal, supervisory and enforcement arrangements for risk mitigation techniques and exchange of collateral has been published in the Official Journal of the European Union. The European Market Infrastructure Regulation requires counterparties to uncleared derivatives to comply with requirements on timely confirmation, portfolio compression, procedures for reconciliation of disputes and the exchange of collateral, collectively known as the risk mitigation techniques. The European Commission is empowered to adopt an equivalence decision declaring that the requirements of a third country are equivalent to the EMIR requirements on risk mitigation.

The Implementing Decision applies to swaps regulated by the Commodity Futures Trading Commission that are not cleared by a CCP where at least one of the counterparties to the swap is established in the US and is registered with the CFTC as a swap dealer or a major swap participant, and for collateral exchange, where the US counterparty is subject to CFTC margin requirements. This Decision means that where an EU counterparty that is subject to the requirements of EMIR enters into an uncleared derivatives contract with a US swap dealer or major swap participant, the EU counterparty will be deemed to have complied with its obligations under EMIR by complying with the US requirements.

This is the first equivalence decision under EMIR relating to the risk mitigation techniques for uncleared derivatives. Equivalence decisions relating to the supervision and regulation of CCPs are already in place. The Implementing Decision enters into force on November 3, 2017.

View the Implementing Decision.