EMIR (European Market Infrastructure Regulation)

Overview

The European Market Infrastructure Regulation (EMIR) was published on 27 July 2012.

It is an essential stage in implementation of the G20 commitments on reducing systemic risks regarding OTC derivatives.

EMIR is yet to be completed by technical standards (RTS) for clearing obligation.

EMIR Refit, adopted by the European Parliament on 18 April 2019 and published in the Official Journal of the European Union (OJEU) on 28 May 2019, provides an evolution of the scope of the central clearing obligation that gradually came into force on 21 June 2016.

MAIN PROVISIONS

• Bilateral contracts, including FX forwards are subject to collateral requirements
• Exchange of collateral mandatory together with independent valuation of OTC derivatives transactions (a daily mark-to-market valuation of outstanding contracts)
• Reporting obligation to Trade Repositories
• Standard OTC derivatives subject to clearing obligation
• Introduction of initial and variable margin calls

MORE INFORMATION

EMIR Regulation 4 July 2012

OTC derivatives and clearing obligation

Challenges & Solutions

MAIN CHALLENGES

• Introduction of initial and variable margin calls
• Differentiated follow-up of bilateral and cleared contracts
• Reporting obligation to Trade Repositories 
• Implementation of collateral accompanied by stringent valuation of OTC derivatives transactions (a daily mark-to-market valuation of outstanding orders)

These changes raise questions about organisation, processing and optimisation of collateral and the associated costs.

CACEIS'S SOLUTIONS

• OTC derivatives processing from plain vanilla to complex instruments
• Collateral management
• Independent mark-to-market valuations 
• Margin call calculation
• Trade Repositories reporting delegation
• Clearing of standard OTC derivatives