Notification of OTC derivatives contracts to records of operations (EMIR)

Regulation 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties ( CCPs ) and trade repositories (EMIR ) , entered into force on August 16, 2012 .

EMIR has extensive regulations, which has long been publishing 2013, in which all obligations to counterparties in OTC derivatives contracts are established , whether or not financial institutions.

This legislation includes nine delegates and three Regulations Regulations Implementing the EC and several guidelines and recommendations of ESMA.
The main obligations of EMIR , the entry into force will be progressive in terms of the required permits and approval of the implementing rules , refer to :
• Obligation to compensate for Central Counterparties ( CCP ) certain classes of OTC derivatives contracts to be determined by ESMA based on their degree of standardization , the entry into force of this obligation in the second half of 2014 is expected .
• Implementation of risk mitigation techniques in the case of contracts not being made up at ECC ( timely trade confirmation , portfolio reconciliation and compression procedures, dispute resolution and litigation, daily valuation of outstanding contracts or demands due additional capital). Derivative contracts that currently use financial and non- financial counterparties shall be following the technical standards published in this area.
• Reporting of OTC contracts authorized by ESMA Records ( Trade Repositories ) Operations, will come into force on February 12, 2014 .
• Requirements on organizational requirements , rules of conduct and solvency for the ECC ;
• Requirements of requirements for trade repositories ( including the obligation to provide access to information operations and public authorities).
EMIR obligations apply to all OTC derivative contracts ( on credit , equities , interest rates , currencies or commodities or other underlying ) . Ie , those contracts that its implementation has not brokered a regulated market are subject to the requirements of centralized clearing , when so determined by ESMA , and in other cases, the application of technical risk mitigation .
     For financial counterparty are considered both ESI , such as banks , the insurance , UCITS funds and their management companies and pension funds , subject to certain transitional exemptions and alternative investment funds .

Coming into force

According to Article 9 of EMIR , the reporting obligation of contracts Records approved or recognized by ESMA Operations shall enter into force on 12 February 2014.

From this date, all entities other counterparty to an OTC derivative contract , whether a CCP is compensated as if it does not, must inform the Records Operations authorized the transactions .

• So far, ESMA has authorized six entities as trade repositories :

– Regis -TR SA , Iberclear and operated by Clearstream .
– DTCC Derivatives Repository Ltd..
– Krajowy Depozyt Papierów Wartosciowych
– UnaVista Ltd
– ICE Trade Vault Europe Ltd.
– CME Trade Repository Ltd.

• Communication of operations requires the identification of the parties to the contract, to what has been agreed to adopt a globally unique code called LEI ( Legal Entity Identifier) ​​whose format and final design has not yet been completed. Tentatively has agreed to issue a Pre -LEI which is then transformed into LEI .

• The issuance of these codes is going to take a different body in each country (called LOU – Local Operating Units – ) . In Spain this function will assume the trade register ( second additional provision of Royal Decree Law 14/ 2013) but has not yet operational . .

• The reporting duties required to be done on the day following the conclusion of the contract business day. The communication should be undertaken by both partners but it is possible to delegate these duties to third parties .

GOMARQ is doing a detailed analysis of the implications of EMIR for their clients as well as monitoring developments as they occur regarding its implementation to offer a better service and keep them informed .
We are at your disposal to answer any questions arise them on the content and implementation of this Standard.

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