ISITC Europe had the privilege to hold an event [Event Presentations (PDF)]with a number of high profile speakers including Andrew Douglas (Head of Public Affairs, DTCC) and John Wilson (former MD & Global Head, OTC Derivatives Clearing at RBS). They focussed on issues surrounding the topic of Market Infrastructure Regulation (EMIR), highlighting some of the complexities, shortfalls and possible consequences of its implementation.
EMIR is the European response to the need, exposed by the recent financial crisis, to regulate the Derivatives market more stringently than before by increasing the levels of transparency and risk mitigation in this market sector. It is analogous principally to Title VII of Dodd Frank.
It can be thought of in 4 parts;
1. Derivatives only – Clearing and reporting obligations
2. Derivatives and cash CCPs – Prudential and conduct of business obligations
3. Cash CCPs only – Access and interoperability conditions
4. Derivatives only Repositories – Prudential and conduct of business obligations
Parliament currently has agreed its draft of the EMIR legislation, to be ratified by Parliament in September 2011.
Council is still currently agreeing its version of the draft, anticipated to be finalised at October 4th ECOFIN meeting.
At that point, trialogue, the 3-way negotiation on the final form of the regulation between Parliament, Council and Commission, can begin. The final form of the regulation is anticipated in Q1 2012. Implementation is scheduled for 31/12/12 according to G20 guidelines.
Current outstanding points subject to be agreed before trialogue can begin are:
1. Scope – OTC or all derivatives
2. Supervisory balance – national regulators vs. ESMA powers
3. Central bank liquidity provision for CCPs
4. Exemptions from the clearing obligation
5. Guaranteed access to data held in repositories
6. Extraterritoriality
Martin Sexton (London Market Systems) provided a briefing on the work being undertaken by the FpML Regulatory Reporting Working group. He examined the new functionally being added to adhere to EMIR and Dodd-Frank. The changes include providing the capability to support real-time transparency, record keeping and position reporting. The working group enhanced the standard to encompass more commodities and developed a new OTC classification to support the requirements of the regulators. Martin also described the workflow associated with reporting to the new OTC repositories, all of which was supported by a comprehensive set of slides.
[Event Presentations (PDF)]
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