EMIR – new regulation concerning derivatives trading
European Markets Infrastructure Regulation (EMIR) is an EU regulation aiming to reduce risks and increase the stability of the European derivatives markets. The regulation has implications especially for trades in Over-The-Counter (OTC) derivatives. OTC derivatives are derivatives which – in contrast to exchange-traded derivatives – are concluded directly between two negotiating parties.
EMIR entered into force in August 2012 and will be gradually implemented in 2013/2015. The regulation is directly applicable in the EU member states and imposes new obligations on companies that trade in derivatives in the context of reporting, clearing and the implementation of certain risk mitigation techniques.
EMIR separates between three different types of entities, and the regulation applies slightly different depending on if you are a financial counterparty, a non-financial counterparty below the clearing threshold or a non-financial counterparty that exceeds the clearing threshold. Examples of financial counterparties include banks, insurance-, fund- and securities companies and managers. You can read more about the clearing threshold here.