EU: The European Market Infrastructure Regulation Flashcards
1
Q
Explain the purpose of the European Market Infrastructure Regulation (EMIR)
A
- Came into effect on 16th August 2012.
- Covers OTC derivatives, central counter parties and trade repositories
- Requires anyone who has entered into a derivatives contract (either a non-financial or financial counterpart) to report and risk manage the derivative positions.
- Technical standards for OTC derivatives, reporting to trade repositories and requirements for trade repositories and CCPs came into effect on 15th March 2013
2
Q
In the UK, who has implemented the EMIR?
A
- HM Treasury
- Implemented through the Financial Services and Markets Act (FSMA) 2000. (OTC derivatives, CCPs and trade repositories) Regulations 2013
- After withdrawal from EU - UK has onshore EMIR, known as the UK EMIR (most obligations are the same as EU EMIR)
- FCA is responsible for registration and supervision of trade repositories
3
Q
What is the EMIR Refit?
A
- Amended the definition for financial counterparties with regard to investments funds and central securities depositaries.
- Introduced a new category of counterparty - small financial counterparties which are exempt from the obligation to clear through a CCP
- EMIR Refit was implemented in the UK through the Financial Services Act 2021
4
Q
What are trade repositories?
A
- They collect and maintain records of derivative transactions
- They’re there to improve transparency in the OTC derivatives markets
- Centralise trade data, reduce systemic risk and helping regulators monitoring market activity
5
Q
EMIR imposes three main requirements on those who trade derivatives. What are these?
A
- To clear OTC derivatives that are subject to the clearing obligation through a CCP (need to go through CCP for trade to be processed)
- To put in place certain risk management procedures for OTC derivatives transactions that are not cleared (for trades that don’t go through CCP)
- To report derivative transactions to a trade repository
