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Derivatives / EMIR

Derivatives play an important role in the economy but are associated with certain risks. The crisis has highlighted that these risks are not sufficiently mitigated in the over-the-counter (OTC) part of the market, especially as regards credit default swaps (CDS). Since the beginning of the financial crisis, the Commission has been working to address these risks.

Legislative Proposals

Adoption of a Delegated Regulation on the procedural rules to impose penalties on trade repositories – 13.03.2014

On 13 March 2014, the European Commission adopted a Delegated Regulation specifying the rules of procedure for penalties imposed on trade repositories by the European Securities and Markets Authority (ESMA).

Adoption of regulatory technical standards for the Regulation on OTC derivatives, central counterparties and trade repositories – 13.02.2014

On 13 February 2014, the European Commission has adopted regulatory technical standards specifying the contracts that are considered to have a direct, substantial and foreseeable effect within the Union or to prevent the evasion of rules and obligations.

They were developed by the European Supervisory Authorities and have been endorsed by the European Commission without modification.

Adoption of a Delegated Regulation on colleges for central counterparties – 28.05.2013

On 28 May 2013, the European Commission adopted a Delegated Regulation on colleges for central counterparties.

Adoption of a Delegated Regulation on the fees to be charged to trade repositories – 12.07.2013

On 12 July 2013, the European Commission adopted a Delegated Regulation specifying the fees to be charged to trade repositories by the European Securities and Markets Authority (ESMA).

Adoption of a Delegated Regulation on the list of exempted entities under EMIR – 12.07.2013

On 12 July 2013, the European Commission adopted a Delegated Regulation to include the central banks and debt management offices of Japan and the United States in the list of exempted entities under Article 1(4) of EMIR, in line with the Report adopted by the European Commission on 22 March 2013.

The European Commission will monitor and report on the developments concerning the finalisation of OTC derivatives rules in other G20 jurisdictions, with a view to also exempting, if necessary, the central banks and debt management offices of other countries via the adoption of further similar delegated acts.

Adoption of the regulatory and implementing technical standards for the Regulation on OTC derivatives, central counterparties and trade repositories – 19.12.2012

On 19 December 2012, the European Commission has adopted nine regulatory and implementing technical standards to complement the obligations defined under the Regulation on OTC derivatives, central counterparties (CCPs) and trade. They were developed by the European Supervisory Authorities and have been endorsed by the European Commission without modification.

The adoption of these technical standards finalises requirements for the mandatory clearing and reporting of transactions, in line with the EU's G20 commitment made in Pittsburgh in September 2009.

Agreement on new European rules to regulate Financial Derivatives (EMIR)

On 9 February 2012, the European Parliament and the Council reached an important agreement on a Regulation for more stability, transparency and efficiency in derivatives markets. It was a key step in the effort to establish a safer and sounder regulatory framework for European financial markets.

On 4 July 2012, the Regulation on OTC Derivatives, Central Counterparties and Trade Repositories (known as "EMIR" - European Market Infrastructure Regulation) was adopted and entered into force on 16 August 2012. . This was a major development which enables the European Union to deliver the G20 commitments on OTC derivatives agreed in Pittsburgh in September 2009.

The Regulation ensures that information on all European derivative transactions will be reported to trade repositories and be accessible to supervisory authorities, including the European Securities and Markets Authority (ESMA), to give policy makers and supervisors a clear overview of what is going on in the markets.

The Regulation also requires standard derivative contracts to be cleared through Central Counterparties (CCPs) as well as margins for uncleared trades and establishes stringent organisational, business conduct and prudential requirements for these CCPs.

Commission proposal for a regulation on OTC derivatives, central Counterparties and trade repositories – 15.09.2010

On 15 September 2010, the Commission tabled a proposal for a Regulation on OTC derivatives, central counterparties and trade repositories. The Regulation introduces a reporting obligation for OTC derivatives, a clearing obligation for eligible OTC derivatives, measures to reduce counterparty credit risk and operational risk for bilaterally cleared OTC derivatives, common rules for central counterparties (CCPs) and for trade repositories, and rules on the establishment of interoperability between CCPs.

Reports

22.03.2013

The European Commission has adopted a report to the European Parliament and the Council on the international treatment of central banks and public entities managing public debt with regard to OTC derivatives transactions. The report provides a comparative analysis of the treatment of central banks and debt management offices within the legal framework of a significant number of third countries. This report is the first step towards exempting certain third countries’ central banks and public debt management offices from the scope of Regulation 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR). It will be updated regularly as the reform process advances in the third-countries considered where the legislation is not yet final, as well as in other G20 jurisdictions not yet included in the report.

Consultations

14.06.2010  Public Consultation on Derivatives and Market Infrastructures
03.07.2009Enhancing the resilience of OTC derivatives markets (closed on 31.08.2009)

Commission Communications and Decisions

28.01.2014

The Commission rejects ESMA´s draft implementing technical standards amending Implementing Regulation (EU) No 1247/2012 to delay the reporting start date for exchange traded derivatives until 1 January 2015. On 6 November 2013 the Commission communicated to ESMA its intention not to endorse ESMA's proposal.

ESMA proposed to delay the reporting start date for exchange traded derivatives until 1 January 2015 in order for it to develop guidelines and recommendations to ensure a common, uniform and consistent application of Article 9 of Regulation (EU) No 648/2012 (EMIR). In particular, ESMA considered necessary to provide guidelines and recommendations on the identification of the counterparties of exchange traded derivatives, a consistent application of reporting requirements under EMIR and Directive 2004/39/EC (MIFID) to the extent possible, and the compatibility of the models, logic and formats used to identify all of the details to be reported as provided for in those two legislative acts.

Those concerns, however, do not justify the proposed delay in the implementation of the reporting of exchange traded derivatives to trade repositories under EMIR. In particular, the involvement of a chain of contracts in exchange traded derivatives does not prevent the identification of the counterparties or an adequate implementation of the reporting obligation. The existing differences between the reporting obligations under EMIR and MIFID are justified by the different addresses and the purposes of the reports under those two legislative acts and they do not appear to be an obstacle to the correct application of both reporting obligations. Moreover, those differences have already been taken into account by ESMA when preparing its original draft regulatory technical standards regarding reporting under EMIR.

Furthermore, postponing the starting date of the reporting obligation for exchange traded derivatives would hinder the achievement of a key objective of EMIR, that is, the identification, monitoring, assessment and mitigation of systemic risk arising from derivative contracts by almost one year. Therefore, the proposed postponement runs counter to the principle of ensuring the stability of the financial system and the functioning of the internal market for financial services.

Read the Commission decisionpdf Choose translations of the previous link .

20.10.2009  The Commission proposes future policy actions to strengthen the safety of derivatives markets
03.07.2009The Commission outlines ways to strengthen the safety of derivatives markets

Conferences

Conference: Derivatives in Crisis - Safeguarding financial stability

On 25 September 2009, the Commission hosted a high-level conference to conclude the public consultation on OTC derivatives markets. Speakers included academics, industry representatives and regulators, coming from the EU and the US.

Notifications to the Commission

Notifications by Member States of the rules on penalties applicable to infringements of the rules under Title II of EMIR (Article 12).