EMIR - CSSF Circular 13/557 - 04/02/2013
- Regulation 648/2012/EU of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (hereafter “EMIR”) which has entered into force on 16 August 2012; and
- EMIR technical standards which have been adopted by the European Commission on 19 December 2012
The CSSF Circular 13/557 published on 23/01/2013 (hereafter “the circular”) introduces EMIR that addresses the risk of OTC trading by imposing new requirements:
- Clearing of standardised derivative contracts through central counterparties;
- Permanent, available and separate initial and variation margins in the form of highly liquid collateral;
- Reporting of all OTC derivative contracts to trade repositories.
The circular introduces as well related technical standards covering the important areas such as eligible collateral for margin payments, and data set to be reported to trade repositories for OTC and exchange-traded derivatives.
The circular also highlight the procedures related to the intra-groups notification and exemptions to be submitted to the competent authority in Luxembourg (the CSSF for financial counterparties established in Luxembourg and under its supervision).
Finally, the circular provides a list of a key action points and questions the financial (investment firms, credit institutions, insurance, UCITS and related Management Companies, AIF, …) and non-financial counterparties can start to address as from now :
- Which trade repository can you report to for the types of derivatives you trade?
- Will you report directly to the trade repository or delegate reporting to your counterparty or a third party?
- Which CCPs accept to clear the types of OTC derivatives you trade? Will you access clearing directly as a clearing member’? If not, you will need to be a client of a clearing member?
- Are your existing systems and processes adequate to implement the new operational risk mitigation requirements set out in EMIR?
- Do you have collateral agreements in place and sufficient collateral available to collateralise non-cleared OTC derivative trades?
Please see our website for further information on the European Market and Financial Infrastructure Regulation (EMIR) and on the EMEA Centre for Regulatory Strategy.
We trust this information is of assistance and remain at your disposal for any further questions.
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