Europe's clearing mandate is finally set to take effect in 2015
By Peter Green and Jeremy Jennings-Mares,
partners at Morrison & Foerster
2015 will see the seventh anniversary of
the collapse of Lehman Brothers and the bail-out of AIG. In the
aftermath of the chaos resulting from these failures, a raft of
new financial regulation has been rolled out across the globe.
Derivatives have been a particular focus of the new regulatory
regime. The G20 implemented a requirement for OTC derivatives
to be centrally cleared, where possible, to seek to reduce
counterparty risk. It also requires the reporting of
transactions to trade repositories, in order to improve
transparency in the market.
In the EU, the majority of the new
regulations affecting derivatives are contained in the European
Market Infrastructure Regulation (EMIR). Although EMIR came
into force back in August 2012, most of the relevant provisions
require further delegated acts and technical standards to be
put in place before coming effective. In this regard, the most
significant development in 2014 was the commencement in
February of the phasing-in of the requirement that all
derivatives transactions (whether traded OTC or otherwise)
entered into, modified or terminated be reported to a trade
repository within certain specified time limits.
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