The long-awaited review of the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR) is approaching fast. While no general overhaul of existing rules is planned, some targeted but potentially meaningful changes are being considered. Following the publication of its report on the implementation of EMIR on 23 November 2016 (link),the European Commission discussed proposed amendments with Member States’ representatives during a meeting in early December 2016. Amongst the proposed amendments are changes to the clearing and margining requirements for non-financial counterparties (NFCs), adjustments to the scope of clearing obligation for small financial counterparties (FCs), simplification of reporting requirements for intragroup transactions, reducing the reporting requirements for exchange-traded derivatives (ETDs), and reducing the number of transactions subject to double-sided reporting requirements.
With regards to NFCs, one of the possible options of amendment is the contentious removal of the hedging exemption to be replaced with an increased threshold for the clearing obligation. We understand that this option has been supported by a number of Member States, but not all. Broader support had reportedly been expressed for proposals to adjust the applicable regime for small FCs, such as exempting the smallest FCs from the scope of the clearing obligation. Similarly, the proposals to ease intragroup reporting requirements and to simplify the reporting of ETDs met with the general support of Member States’ representatives. Double-sided reporting remains one of the most heavily contested provisions of EMIR. There seems to be agreement adjusting specific elements of the regime but a move towards exclusively single-sided reporting seems unlikely. Some of the options considered include the introduction of single-sided reporting for NFCs below the clearing threshold – or potentially to all NFCs. We also understand that backloading and frontloading requirements, unpopular across industry, are up for review and could well be removed completely.
Despite previous informal feedback indicating that the revised proposal may be ready for the publication as soon as in March, the adoption of legislative amendments to EMIR has now been postponed until June 2017. The relevant agenda item is now scheduled for discussion of the College of Commissioners for 7 June (link). Once adopted, proposed amendments will have to be approved by the European Parliament and by the Council in the course of ordinary legislative procedure.