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EMIR

First rules on EMIR mandatory clearing adopted

See here for a press release from the European Commission, announcing the adoption of the Delegated Regulation around the mandatory clearing of certain interest rate instruments under EMIR. The rules require affected parties to clear the covered instruments via CCPs according to a phased timetable, which starts after 6 months and completes after 3 years, in four groups.

The phasing starts with clearing members, whether Financial Counterparty (FC) or Non Financial Counterparty (NFC). The next two groups cover reaming FCs according to their level of activity and the fourth other NFCs. Generally “NFC-“s, i.e. below the clearing threshold set in EMIR, are not subject to mandatory clearing.

Many in the energy and commodities industries are “NFC-” and will therefore not be subject to mandatory clearing. However, a proportion will lose their exemptions under MiFID and therefore become FCs. This will bring mandatory clearing into scope for such parties. Those who are still exempt may never the less find that some liquidity will move to cleared, which will increase pressure to clear even when it is not mandatory.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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