The FCA has updated its webpage concerning the European Commission equivalence decision under EMIR for derivatives transactions in the United States and intragroup exemptions.

The FCA refers to the Commission’s implementing act determining the United States to be equivalent to EMIR in terms of the legal, supervisory and enforcement arrangements for non-centrally cleared over-the-counter derivatives transactions. In particular, the decision concludes that Commodity Futures Trading Commission (CFTC) rules on risk monitoring and mitigation for over-the-counter derivative contracts not cleared by a central counterparty are equivalent to EMIR.

The FCA states that the Commission has now confirmed to it, other Member State competent authorities and the European Securities and Markets Authority that this equivalence determination does include intragroup exemptions under Article 11(8) and 11(9) of EMIR. This means that the temporary intragroup exemptions that the FCA granted for trades between UK and US firms technically expire on 2 March 2018, that it four months after the coming into effect of the Commission’s equivalence decision on the US. However, the positive equivalence determination also allows firms to apply for exemptions with no expiry date.

The FCA has decided to adopt a streamlined process for firms wishing to apply for these new exemptions. UK firms who currently benefit from the derogation under the Margin RTS (Commission Delegated Regulation 2016/2551) with US group entities covered by the equivalence decision must:

  • notify the FCA of the entity pairs to which the equivalence decision applies; and
  • confirm whether there have been any other changes to the conditions under which the original intragroup derogation was granted.

View FCA updates EMIR webpage concerning intragroup exemptions, 12 February 2018