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

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

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

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).

Last update: 02.05.2013 | Top