EMIR - Financial Conduct Authority

European Market Infrastructure Regulation (EMIR) – what you need to know

Published: 08/05/2015     Last Modified: 21/04/2016
The European Union regulation on derivatives, central counterparties and trade repositories (EMIR) introduces new requirements to improve transparency and reduce the risks associated with the derivatives market. EMIR also establishes common organisational, conduct of business and prudential standards for CCPs and trade repositories.

Go straight to our latest EMIR updates

EMIR imposes requirements on all types and sizes of entities that enter into any form of derivative contract, including those not involved in financial services. It applies indirectly to non-EU firms trading with EU firms.

The new regulation comes into force during 2013 and 2014. It requires entities that enter into any form of derivative contract, including interest rate, foreign exchange, equity, credit and commodity derivatives, to:

  • report every derivative contract that they enter into to a trade repository;
  • implement new risk management standards, including operational processes and margining, for all bilateral over-the-counter (OTC) derivatives i.e. trades that are not cleared by a CCP; and
  • clear, via a CCP, those OTC derivatives subject to a mandatory clearing obligation.

  • 16 August 2012: EMIR entered into force, but most provisions only apply after technical standards enter into force.
  • 15 March 2013: The technical standards on OTC Derivatives, Reporting to Trade Repositories and Requirements for Trade Repositories and Central Counterparties entered into force.
  • 15 March 2013: Non-financial counterparties exceeding the clearing threshold are required to notify the FCA.
  • 15 March 2013: All legal and contractual terms of non-centrally cleared OTC derivative contracts must be confirmed between counterparties within specified timelines.
  • 15 September 2013: Risk management of non-cleared OTC derivatives through portfolio reconciliation, dispute resolution and trade compression will apply.
  • 12 February 2014: Details of all classes of derivative contract (both OTC and ETD) are required to be reported to recognised trade repositories.
  • 18 March 2014: The first CCP was authorised under EMIR.
  • 10 April 2014: The technical standards on the cross-border application of EMIR came into effect. Article 2 however (which sets out which contracts have a direct, substantial and foreseeable effect within the EU) applied from 10 October 2014.
  • 11 August 2014: Financial counterparties/NFC+s are required to provide daily reports on mark-to-market valuations of positions and on collateral value.
  • 1 September 2016: Variation margining requirements for non-centrally cleared trades will apply for the largest institutions.
  • 1 March 2017: Variation margining requirements for non-centrally cleared trades will apply for all other institutions that are within scope.
  • 1 September 2016 – 1 September 2020: Initial margining requirements for non-centrally cleared trades will apply from 1 September 2016 for the largest institutions. This will be followed by an annual phase in such that all other institutions that are within scope above a minimum threshold will be subject to initial margin from 1 September 2020.

Implementation dates are subject to change depending on the progress of EU implementation.

EMIR is composed of a number of separate EU Regulations. The EMIR library includes links to the relevant EU regulation and technical standards under EMIR, as well as links to additional Q&As, domestic legislation and FCA presentations.

Market participants can register to receive email updates on the EMIR from the FCA. These include information on the implementation timetable, alerts when new documents or further guidance are published and further details about the process for apply for making notifications and applying for exemptions in the UK.

To register to receive updates please email you name and contact details (including email address) to EMIR@fca.org.uk. You can unsubscribe at any time by emailing unsubscribe and your name and email address to the same address. 

Before contacting the FCA please review the information included in these web pages and the EMIR library, we aim to include the answer to a lot of common questions here. If you still have questions in relation to EMIR and its implementation in the UK please contact emir@fca.org.uk.

Latest Updates 

April 2016

BCBS Publishes Consultation Paper on revisions to the Basel III leverage ratio framework

On 6 April 2016, the Basel Committee on Banking Supervision (BCBS) released a consultation paper on proposed revisions to the Basel III leverage ratio framework.

This consultation proposes a set of changes to the standard released in January 2014. Of particular relevance in the context of EMIR is the discussion of the impact of the leverage ratio on client clearing. The proposed changes to the framework are an important element of the regulatory reform programme that the Basel Committee has committed to finalise by the end of 2016.

The consultation closes on 6 July 2016.

ESMA Proposes one-day margin period of risk for CCP Clients Accounts

On 5 April 2016, the European Securities and Markets Authority (ESMA) published a final report on the review of Article 26 of Commission Delegated Regulation 156/2013 with regard to regulatory technical standards (RTS) on requirements for CCPs on the time horizons for the liquidation period under EMIR.

The amended RTS detail the margin period of risk (MPOR) for CCP client accounts and reduces the MPOR from two-day to one-day for gross omnibus accounts and individual segregated accounts for exchange traded derivatives and securities.

The European Commission has three months to decide whether to endorse the RTS. If they do endorse the RTS, this will be followed by a period of non-objection by the European Parliament and Council of the EU.

Updated ESMA EMIR Q&As (April 2016)

On 5 April 2016, the European Securities and Markets Authority (ESMA) published an update to the EMIR Q&As in respect of the population of the clearing obligation in the reporting section.

The new Question TR 42 covers how to populate this field during the frontloading period and how long counterparties are allowed to report value 'X' for 'not available'.

ESMA issues amended rules for access, aggregation and comparison of data across trade repositories

On 5 April 2016, the European Securities and Markets Authority (ESMA) released a final report for an amended RTS as referred to in Article 81 of EMIR. It covers the frequency and details of the information to be made available to relevant authorities and the information to be published as well as the operational standards required in order to aggregate and compare data across repositories.

The report covers the responses received and ESMA’s consideration of them. The amendments will address some of the data issues experienced by relevant regulators when the EMIR reporting obligation came into effect and should also offer legal certainty to current and new entrants to the trade repository market.

March 2016

ESAs submit final draft regulatory technical standards on margin for non-cleared derivatives to the European Commission

On 8 March 2016, the European supervisory authorities (EBA, ESMA and EIOPA ('ESAs')) submitted to the European Commission their final draft regulatory technical standards (RTS) on risk-mitigation techniques for OTC derivative contracts not cleared by a CCP under Article 11 of the European Market Infrastructure Regulation (EMIR). The RTS detail the requirements for firms to exchange margins on non-centrally cleared OTC derivatives as well as specify the criteria regarding intragroup exemptions.

The European Commission has three months to decide whether to endorse the RTS. If they do endorse the RTS, this will be followed by a period of non-objection by the European Parliament and Council of the EU.

In order to ensure a proportionate implementation, the RTS confirm that the requirements will enter into force on 1 September 2016 subject to certain phase-ins, giving firms who are subject to these requirements time to prepare for the implementation. The phase-in is as follows:

Variation margin (VM)

  • September 2016 for entities with group’s notional amount of derivatives above EUR 3 trillion
  • March 2017 for all other entities

Initial margin (IM)

  • September 2016 for entities with group’s notional amount of derivatives above EUR 3 trillion
  • September 2017 for those above EUR 2.25 trillion
  • September 2018 for those above EUR 1.5 trillion
  • September 2019 for those above EUR 0.75 trillion
  • September 2020 for those above EUR 8 billion

Related documents

Final draft RTS on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP under EMIR

EBA press release

Delegated regulation relating to clearing of certain credit derivatives contracts

On 1 March 2016, the European Commission adopted new rules in the form of a delegated regulation that will make it mandatory for certain over-the-counter (OTC) credit default derivative contracts to be cleared through central counterparties.

The rules supplement the European Market Infrastructure Regulation (EMIR) and form part of the implementation of the agreement by G20 leaders in 2009 that standardised OTC derivative contracts should be centrally cleared through central clearing counterparties (CCPs). The delegated regulation is subject to scrutiny by the EU Parliament and Council of the EU. Once finalised, the rules will be published in the Official Journal of the EU and will enter into force on the twentieth day following publication. The clearing obligation will then be phased in over a period of three years to give extra time for smaller market participants to comply. NB: counterparties will need to refer to the definitions in the delegated regulation to establish which category they fall within. Financial counterparties in categories 1 and 2 should also note the frontloading requirements that are set out.

As noted above, the delegated regulation covers certain credit default derivatives contracts. The specific classes that are within scope are set out in the annex to the delegated regulation. As shown, the new rules will cover the following types of contracts:

  • untranched iTraxx Index credit default swaps (Europe Main, five-year tenor, series 17 onwards, with EUR as the settlement currency)
  • untranched iTraxx Index credit default swaps (Europe Crossover, five-year tenor, series 17 onwards, with EUR as the settlement currency)

Related documents

European Commission press release

Delegated regulation

Annex to the delegated regulation

February 2016

List of Pension Scheme Arrangements Exempted from the Clearing Obligation

The European Market Infrastructure Regulation (EMIR) provides for the obligation of counterparties to clear OTC derivative contracts that have been declared subject to the clearing obligation. Under Article 89 of EMIR, some pension scheme arrangements may benefit from a temporary exemption (currently to 16 August 2017) from the clearing obligation for their OTC derivative contracts that are objectively measurable as reducing investment risks directly related to their financial solvency.

Pursuant to Article 89(2) of EMIR, we have published a list of the types of pension scheme entities and arrangements which we have granted an exemption from the clearing obligation. This follows, and takes into account, the publication of opinions by the European Securities and Markets Authority (ESMA), which in turn reflect ESMA’s consultation with the European Insurance and Occupational Pensions Authority (EIOPA).

The entities and arrangements listed in this document have been assessed by us as complying with Article 2(10)c or d of EMIR, and as encountering difficulties in meeting the variation margin requirements. The list does not include pension scheme arrangements under Article 2(10)a and b of EMIR, which automatically qualify for the temporary clearing exemption.

Common Approach - US and EU CCPs

On 10 February 2016, the European Commission and the CFTC published a joint statement to announce that a common approach regarding requirements for central clearing counterparties (CCPs) in the EU and the US had been reached.

Related documents:

European Commission press release

Joint Statement by the European Commission and CFTC

ESMA press release

Updated ESMA EMIR Q&As

On 16 February 2016, the European Securities and Markets Authority ("ESMA") published its updated EMIR Q&As. This update includes additional guidance on the following:

  • Default management of CCPs
  • NCA access to Trade Repository data
  • Reporting of notional in position report
  • Frontloading
  • Swaptions

Related documents:

ESMA EMIR Q&As

ESMA Press Release

Archived EMIR news

Register for EMIR updates from the FCA

To register to receive updates please email you name and contact details (including email address) to EMIR@fca.org.uk. You can unsubscribe at any time by emailing unsubscribe and your name and email address to the same address.