The Economic and Monetary Affairs Committee (“ECON”) of the European Parliament announced on February 7 2013, that it was withdrawing its objection to the EMIR regulatory technical standards (“RTS”) proposed by ESMA and adopted by the Commission on 19 December 2012. The RTS define who will be affected by EMIR, and how.

By way of background, ECON adopted a motion for a European Parliamentary resolution to reject the RTS on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, risk mitigation techniques for OTC derivatives contracts not cleared by a CCP; and the RTS for central counterparties.

It appears that ECON’s concerns were founded on a failure by the Commission to adequately respond to ECON’s comments on the draft RTS and the fact that not all RTS had been submitted by ESMA by the required deadline. Additional, specific concerns related to ECON’s view that a number of the RTS reflected neither the intention and/or the outcomes envisaged by EMIR.

The withdrawal of the objection was based on assurances given by the European Commission, including the assurance that the European Commission would publish frequent Q&A documents to address any matters over which there arose legal uncertainty. This means that the RTS can now enter into force 20 days after their publication in the Official Journal of the EU, most likely around mid-March. While EMIR is expected to be fully in force by mid 2013, the first obligations (the reporting of credit and interest rate derivatives) are now expected to apply from July 2013 with the remaining obligations coming into force periodically.

EMIR: Application to foreign exchange swaps and forwards

The EMIR Q&A document issued on 8 February 2013 has confirmed that EMIR applies to all types of derivatives defined in points (4) to (10) of Section C of Annex I to MIFID. This includes foreign exchange swaps and forwards. The Q&A document confirms that the clearing obligation to foreign exchange derivatives will be assessed by ESMA in accordance with the clearing obligation procedure, taking into account the specificities of the product. In addition, for non-cleared foreign-exchange OTC derivative contracts, the appropriate margin requirements applicable to these contracts will be specified by the technical standards on margining requirements to be issued next year. Foreign exchange derivative contracts are also subject to the reporting obligation of EMIR.