To whom does EMIR apply, and who is the competent authority?
EMIR applies to CCPs and their clearing members, financial counterparties and trade repositories. In particular cases, EMIR also applies to non-financial counterparties and trade platforms. Financial counterparties are taken to mean investment firms, banks, insurers, reinsurers, pension funds, premium pension institutions, UCITS and investment funds.
The Netherlands Authority for the Financial Markets (AFM) is the competent supervisory authority for non-financial counterparties, investment firms, UCITS and investment funds. DNB is the competent supervisory authority for banks, insurers, reinsurers, pension funds and premium pension institutions. CCPs with registered office in the Netherlands wishing to provide services under EMIR must apply for authorisation with DNB. DNB is also responsible for regular supervision of these CCPs, with an advisory role for the AFM.
Who is responsible for issuing interpretations and clarification of EMIR rules and regulations?
ESMA is responsible for issuing interpretations and clarification of EMIR rules and regulations. It also drafts proposals on regulatory technical standards (RTS) and implementing technical standards (ITS). These rules explain the details of the EMIR requirements. The European Commission has the authority to adopt these proposals. ESMA also monitors activities with respect to derivatives transactions that are not eligible for central clearing, in order to identify systemic risks inherent to specific categories of OTC derivatives and to avoid regulatory arbitrage between centrally cleared and non-cleared derivatives transactions. After consulting the European Systemic Risk Board (ESRB), ESMA can then take appropriate measures or propose to review the RTS. The ESRB is responsible for macro-prudential supervision of the financial system, with the aim of mitigating systemic risks to financial stability in the European Union. ESMA regularly issues interpretations on the implementation of EMIR in the form of Q&As, to ensure consistent, efficient and effective supervisory practice.
When did the EMIR requirements become effective?
EMIR became effective on 16 August 2012. The EMIR requirements did not all enter into effect at the same time, however, as the underlying RTS were not all adopted and issued simultaneously. For example, two risk-mitigating techniques for non-centrally cleared OTC derivative contracts, i.e. timely confirmation and daily mark-to-market valuations, entered into effect on 15 March 2013, whereas the requirements for portfolio reconciliation and compression and the dispute resolution procedure became effective on 15 September of that year. For the central clearing requirement, OTC derivatives must first be broken down into categories subject to the central clearing obligation. The requirements covering the obligation to exchange collateral in non-centrally cleared OTC derivative transactions still have to be worked out in more detail. See the ESMA website for more information on the phased introduction of the EMIR requirements and the latest developments.