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Banks Shun Emir's Indirect Clearing Service

By Cecile Sourbes
Published August 12, 2014 Risk

Banks are still incapable of offering indirect clearing for over-the-counter derivatives more than two years after rules for the service were added to the European Market Infrastructure Regulation (Emir) – an attempt by regulators to ensure small OTC market participants would be able to clear. Big banks say the terms on which they would have to offer the service make it commercially unviable.

Indirect clearing allows the clients of a clearing member to take on clients of their own, but the member remains the ultimate guarantor of the risk, and Emir requires both groups of customers to be treated the same. That means giving the so-called end-clients a choice of at least two forms of collateral protection.

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ESMA Releases List of Authorized Counterparties Outside the EU

By Andrew Saks-McLeod
Published August 12, 2014 LeapRate

As the European rulings on post-trade processing continue to take shape, the European Securities and Markets Authority has today published a list of central counterparties (CCPs) which are established in countries located outside the European Union and European economic area, that have applied for recognition under the European Union regulatory framework on OTC derivatives, CCPs and trade repositories in accordance with the European Market Infrastructure Regulation (EMIR).

The list comprises of thirty-eight executing venues, clearing houses, exchanges, diversified market places and depositories, which are located in various regions including Australia, the Asia Pacific, Israel, and North America.

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Next Phase of Reporting Begins in Europe

Published August 11, 2014 FOW

Collateral and valuation data for derivatives trades will have to be reported to trade repositories (TRs) from today under the European Market Infrastructure Regulation (Emir).

The new requirements apply to financial firms and non-financials who have not been granted an exemption. However, doubts remain about the model used in Europe and the value of the data.

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Regulatory Investments Begin to Turn the Corner

By Rob Daly
Published August 11, 2014 The Trade

Buy-side compliance expenditure will likely ease once regulators finish deploying major market reforms, such as Dodd-Frank, MIFID and EMIR, according to Matthew Gibbs, product manager at technology vendor Linedata, who believes recent reforms have changed internal compliance organisation permanently.

Gibbs dates changes in regulators’ behaviour to the eve of the global financial crisis.

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Some EU Countries Unable to Punish Emir Breaches

By Fiona Maxwell
Published July 30, 2014 Risk

Firms in Poland and Ireland cannot be fined for reporting breaches, while Belgium, Portugal and Spain have only recently acquired the ability to impose sanctions.

In the latest embarrassment to hit Europe's new derivatives reporting regime, it has emerged that at least five countries were unable to enforce the rules when they were introduced in February, and two of these – Poland and Ireland – still cannot fine companies that breach the regulations.

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EMIR Trade Reporting Deadline at Hand

By Staff
Published July 25, 2014 Markets Media

On August 11, trade reporting requirements under European Market Infrastructure Regulation (Emir) will kick in, requiring firms to report valuation and collateral information, in addition to the basic trade reporting requirement that they have been subject to since February. This puts the onus on buy-side firms to either do the reporting themselves, or delegate it to their sell-side broker.

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Need to Identify AIFs Within Fund Structures for Emir

By Isobel Wright and Nora Bullock
Published July 10, 2014 Hedge Funds Review

The European Market Infrastructure Regulation (Emir) came into force on August 16, 2012, and sets out new requirements, including clearing obligations, risk mitigation techniques for uncleared trades and trade reporting, for all over-the-counter derivatives. The extent to which the new requirements will apply will depend on how parties are classified under Emir.

This article looks at how these requirements may affect alternative investment funds that enter into derivatives transactions and the interaction between Emir and the alternative investment fund managers directive (AIFMD). In the UK, existing alternative investment fund managers have been able to rely on a one-year transitional period, but need to be AIFMD-compliant by July 22, 2014. Under AIFMD, an internal or external AIFM must be appointed for each fund. 

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Citi Paper Warns Hedge Funds on Collateral Management and Rising Financing Costs

Published July 1, 2014 COOConnect

Hedge funds must optimise the way in which they manage their collateral following reforms of the over-the-counter (OTC) derivatives markets while the cost of financing is going to rise exponentially in light of Basel III capital requirements, a new study from Citi Prime Finance has said.

There is widespread speculation that a collateral shortfall could emerge as more OTC derivatives are increasingly cleared through central counterparty clearing houses (CCPs) as mandated under Dodd-Frank in the US and the European Market Infrastructure Regulation (EMIR).

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SGSS Launches EMIR Compliant Reporting Service

Published June 27, 2014 The Trade

Société Générale Securities Services (SGSS) has launched a new service providing reporting of OTC derivative transactions to trade repositories as required by the European markets infrastructure regulation (EMIR).

The reporting service covers multi-counterparties and multi-asset classes and, as mandated by the European Securities and Markets Authority (ESMA), the SGGS service supports OTC derivatives users in the EU through the entire trading process. SGSS reports details for derivatives transactions to the London-based DTCC Derivatives Repository on a D+1 basis for all counterparties and covers all derivative asset classes.

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Dealers Rail at 'Absurd' EU Margin Rules

By Matt Cameron
Published June 25, 2014 Risk

European banks have reacted with dismay after regulators confirmed they would be expected to collect margin from non-EU corporates when executing uncleared trades – a requirement that does not apply to their rivals, and would also not affect trades with European corporates. Critics argue the draft rules – which are the EU version of internationally agreed standards on compulsory bilateral margining - will result in third-country corporates shunning European banks.

"It is absurd and would effectively disincentivise third-country non-financial entities from trading with EU counterparts," says one derivatives risk manager at a US bank in New York.

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