Article 85(1) of the European Market Infrastructure Regulation (EMIR) provides that the European Commission shall review and prepare a general report on the Regulation which shall be submitted to the European Parliament and the Council of the EU, together with any appropriate proposals.

The Commission has now published its report noting that no fundamental change should be made to the nature of the core requirements of EMIR, which are integral to ensuring transparency and mitigating systemic risks in the derivatives markets.

However, following earlier stakeholder engagement the Commission also highlights in the report certain areas that could be adjusted in order to simplify and increase the efficiency of the EMIR requirements and reduce disproportionate costs and burdens.

For example, the Commission notes the absence of a mechanism under EMIR for the clearing obligation to be suspended promptly in order to react quickly to dramatic changes in market conditions. The Commission will therefore propose a mechanism for suspending a clearing obligation as part of the proposal on central counterparty (CCP) recovery and resolution. It will also consider the possibility of broadening the scope of the suspension of a clearing obligation for other appropriate purposes.

The Commission also states in the report that:

  • better information sharing could make compliance with margin requirements more efficient for market participants and enable them to better manage their own assets. It also states that a mandate for initial margin models to be endorsed by authorities could promote certainty for market participants and authorities alike;
  • promoting transparency by streamlining reporting requirements in certain areas and enhancing the functioning of trade repositories is essential to fully achieve the objectives of EMIR. Therefore, a further assessment of the current rules should be undertaken;
  • alternative methods for providing access to third country authorities of trade repositories’ data should be explored;
  • it is appropriate to assess whether adjustments should be made to the scope of the core requirements under EMIR in order to address the challenges faced by non-financial counterparties (NFCs);
  • further consideration should be given to whether any NFCs, or only some NFCs based on the volume and type of activity in derivatives markets, should be captured by clearing and margin requirements; and
  • an assessment should be made as to whether the current exemption for pension scheme arrangements should be prolonged or made permanent without compromising EMIR’s objective of reducing systemic risk.

View Report from the Commission to the European Parliament and the Council under Article 85(1) of Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, 23 November 2016

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