The Financial Markets Law Committee (FMLC) has published a paper highlighting issues of legal uncertainty which arise from the draft regulatory technical standards set out in the consultation paper published by the European Securities and Markets Authority on the clearing obligation under the European Markets Infrastructure Regulation (EMIR) as it pertains to the class of foreign exchange non-deliverable forward over-the-counter derivatives.

Specifically, the FMLC addresses uncertainties arising with regard to:

• harmonisation in the non-deliverable forward clearing obligations between the EU and other jurisdictions;
• the obligation to clear over-the-counter derivative contracts that are entered into after the notification provided in article 5(1) of EMIR and before the date of application of the clearing obligation;
• the inclusion of certain maturities in the scope of the clearing obligation; and
• the risks associated with central counterparty withdrawal.

View FMLC response to ESMA consultation paper on the clearing obligation under EMIR, 30 January 2015