What is the EMIR clearing obligation?
The obligation to centrally clear certain classes of OTC derivative contracts through a central counterparty (CCP) stems directly from the European Market Infrastructure Regulation (EMIR) and its main objective to reduce counterparty risk and systemic risk.
What is the clearing threshold under EMIR?
What is the Clearing Threshold?
| Value of the clearing thresholds | Asset Class |
|---|---|
| EUR 1 billion* | Equity derivative contracts |
| EUR 3 billion* | Interest rate derivative contracts |
| EUR 3 billion* | Foreign exchange derivative contracts |
| EUR 3 billion* | Commodity derivative contracts and others |
What is the difference between EMIR and ESMA?
The European Securities and Markets Authority (ESMA) applies mandatory clearing obligations for specific OTC derivative contracts if a contract has been assigned a central counterparty under EMIR. EMIR granted a temporary exemption from these guidelines to pension funds until August 2017.
What is mandatory clearing?
WHAT IS MANDATORY CLEARING? Clearing is the process by which bilateral OTC derivatives con- tracts (“OTC Contract”) are “novated” to an authorised2 Central Counterparty (“CCP”) which interposes itself between the two original contracting parties.
What is the purpose of EMIR reporting?
EMIR mandates reporting of all derivatives to Trade Repositories (TRs). TRs centrally collect and maintain the records of all derivative contracts. They play a central role in enhancing the transparency of derivative markets and reducing risks to financial stability.
What is a clearing threshold?
What is the Clearing Threshold? The Clearing Threshold is an amount set by class of OTC derivative contracts. It is set by regulatory technical standards and will be reviewed on a regular basis following public consultation. Value of the clearing thresholds.
What is EMIR reporting requirements?
EMIR requires all counterparties and CCPs to report details of any derivative contract (with the underlying asset classes – interest rate, FX, credit, equities and commodities) they have concluded and of any modification or termination to TRs.
Who does EMIR report apply?
Trade Repositories
EMIR mandates reporting of all derivatives to Trade Repositories (TRs). TRs centrally collect and maintain the records of all derivative contracts. They play a central role in enhancing the transparency of derivative markets and reducing risks to financial stability.
What is the difference between clearing and settlement?
Settlement is the actual exchange of money, or some other value, for the securities. Clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities.
What swaps are required to be cleared?
`INTEREST RATE SWAPS REQUIRED TO BE CLEARED.
What is the Emir clearing obligation?
EMIR Clearing Obligation. The obligation to centrally clear certain classes of OTC derivative contracts through a central counterparty (CCP) stems directly from the European Markets Infrastructure Regulation (EMIR) and its main objective is to reduce counterparty risk and systemic risk.
What has Esma decided to phase in the clearing obligation?
The European Securities and Market Authority (ESMA) has decided to phase in the clearing obligation depending on the categories of the counterparties to the OTC derivative contracts. The categories are defined in the Regulatory and Technical Standards (RTS) as follows:
What is Emir and how does it work?
EMIR includes the obligation to centrally clear certain classes of over-the-counter (OTC) derivative contracts through Central Counterparty Clearing (CCPs). For non-centrally cleared OTC derivative contracts, EMIR establishes risk mitigation techniques.
What is EMIR Refit 2019/834?
Regulation (EU) 2019/834 amending EMIR, EMIR Refit, provides for a new regime to determine when Financial counterparties (FC) and Non-Financial counterparties (NFC) are subject to the clearing obligation. When does a counterparty become subject to the clearing obligation?