Timely confirmation, portfolio reconciliation and dispute escalation obligations were the warm up for Emir, next is trade reporting, clearing and bilateral margining, writes Gunnar Stangl of Commerzbank.
The European market infrastructure regulation -Emir -the child
of the G20 derivative reform and little brother of Dodd-Frank,
quietly turned one year old last August. So quietly that in
discussions with clients at the time we still found quite a few
who would state that Emir does not concern them.
This view was particularly prevalent with non-financial
counterparties (NFCs) and with counterparties of European
market participants outside the EU. While the former thought
that a regulation which set out to correct perceived excesses
of financial markets should not concern them, the latter found
Emir applies to an "undertaking established in the EU" -and
Those previously exposed to Dodd-Frank were aware of how DF
largely exempted the non-financial market participants and thus
accurately reflected the differences in operational setups of
financial and non-financial market participants.
Asymmetric reporting in the US means that the counterparty
better equipped to report will take on this role -usually a
Swap Dealer or Major Swap Market Participant.
This is a sensible arrangement: after all, not every driver of
a car is expected to have his own safety course to validate
that his car is fit for purpose. It also allowed US authorities
to get a functioning and complete reporting system up and
running by December 2012.
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