The introduction of EMIR significantly changes the current rules and market practices of Over-The-Counter (OTC) derivatives and Exchange Traded Derivatives (ETD) by introducing clearing for standardized OTC derivative transactions, new requirements for non-cleared OTC derivative transactions and reporting for all derivative transactions in the marketplace.


Implementation of EMIR requirements impacted the financial industry in a very challenging timeframe.

The upcoming clearing obligation and new collateral constraints will again affect front office derivative trading strategies as well as back office follow-up duties to ensure compliance with EMIR.

EMIR applies to all financial counterparties (FC) and non-financial counterparties (NFC) established in the EU entered into derivative contracts as a principle trading counterparty.


Various types of entities are concerned:

  • Corporates and Special Purpose Vehicle (SPV) trading OTCs and/or ETDs are NFCs. e.g. airlines, manufacturers and energy corporates.

  • Credit institutions, investment funds and insurance undertakings trading OTCs and/or ETDS are FCs


While there has been uncertainty around the definition of derivative contracts in scope of EMIR (i.e. commodity and forward contracts), the European Securities Market Authority (ESMA) has recently issued guidelines with definitions of commodity derivatives under MiFID to ensure the consistent application of EMIR across all EU member states.


N.B.: EMIR also applies to all counterparties also when trading with counterparties located outside the EU. E.g. Complying with the Dodd Frank Act when trading with a US counterparty does not exempt you to implement EMIR.

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Clearing obligations Risk mitigation techniques Reporting obligations


There are several connections to other regulations such as:

  • CRD IV/CRR (Basel III) in terms of capital requirements;
  • MiFID II/MiFIR in terms of requirements for trade transparency and mandatory electronic execution;
  • Accounting of OTC derivatives and related collaterals (e.g. IFRS);
  • ESMA guidelines on ETFs and other UCITS issues (ESMA/2012/832) in terms of collateral management.


After the commitment of the G-20 Leaders in September 2009 at the Pittsburgh summit, European and US regulators have responded by proposing the new European Market Infrastructure Regulation ("EMIR") in the EU and the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") in the US. Both regulations aim to make derivative markets safer and transparent, as committed by the G-20:


"All standardized OTC derivatives contracts should be traded on exchanges or electronic trading platform […] and cleared through central counterparties (CCP)[…] OTC derivative contracts should be reported to trade repositories […]".



EMIR and the Dodd-Frank Act share the same objective when it comes to the regulation of the OTC derivatives market:

  • improving transparency;
  • reducing counterparty and operational risks relating to OTC derivatives transactions.

Regulatory Framework

EMIR is the 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. It entered into force on 16 August 2012 and is binding in its entirety and directly applicable in all European Member States. The Commission de Surveillance du Secteur Financier (CSSF) has also issued Circular 13/557 on 23 January 2013 to draw the attention of the Luxembourg market to EMIR. Several details are further clarified through regulatory and implementing technical standards (RTS & ITS). They provide more details about specific requirements and the timely application of the various parts of EMIR. The technical standards enter into force on 15 March 2013.
Further RTS & ITS will follow.


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