European Market Infrastructure Regulation (EMIR)
From G20 to EMIR: the importance of CCPs for the safety and efficiency of the financial markets
CCPs are financial market infrastructures that reduce and manage the counterparty risks in financial markets. In 2008, the bankruptcy of Lehman Brothers, a bank very active in OTC derivatives, demonstrated the ability of CCPs to successfully manage a default and prevent contagion between market participants. According to the analysis of the European Commission, the opacity of the market and the lack of adequate risk management ‘prevented, on the one hand, other market participants from knowing exactly what the exposures of their counterparties were to these three entities (the events in the credit default swaps market after Lehman’s bankruptcy are a point in case), which resulted in mistrust and the drying up of liquidity in the inter-bank money market. It also prevented regulators from being able to identify early the risks building up in the system, the extent to which risks were being concentrated in a handful of institutions and consequently the effects that their default would have for financial stability.’ (‘Ensuring efficient, safe and sound derivatives markets’, European Commission staff working paper, COM(2009) 332 final)
The G20 leaders agreed to improve the OTC derivatives market through the following measures:
In the EU, the following steps still need to be taken in order to fully implement the European Market Infrastructure Regulation (EMIR):
In line with the EMIR provisions, the European Commission started the review of the legislation in 2015 and this lead to a total of three main framework pieces of EMIR legislation:
23 Oct 2019 European Union – EMIR 2.2 framework legislation (Level 1)
20 May 2019 European Union – EMIR Refit framework legislation (Level 1)
27 Jul 2012 European Union – EMIR framework legislation (Level 1)
These pieces of legislation are supplemented by Level 2 and Level 3 acts, which include the following ESMA Guidelines and Q&As.
List of CCPs authorised or recognised by ESMA
List of CCPs authorised or recognised by ESMA
Public authorities publications
23 Oct 2019 European Union – EMIR 2.2 framework legislation (Level 1)
20 May 2019 European Union – EMIR Refit framework legislation (Level 1)
23 Nov 2016 European Commission – European Commission proposal on EMIR review
05 Nov 2015 ESMA – Consultation paper on indirect clearing under EMIR
21 May 2015 European Commission – Publication of the European Commission consultation on the EMIR review
30 Oct 2014 European Commission – Equivalence of the regulator framework of Australia CCPs
04 Sep 2014 European Commission – Equivalence of the regulator framework of Hong Kong CCPs
10 Jun 2014 European Commission – Equivalence of the regulator framework of Japan CCPs
04 Jun 2013 European Commission – Equivalence of the regulator framework of Singapore CCPs
28 May 2013 ESMA – Guidelines on the implementation of the CPMI-IOSCO PFMI (Level 2)
19 Dec 2012 ESMA – Guidelines for interoperability arragements (Level 2)
04 Jul 2012 ESMA – Guidelines on written agreements between members of CCP colleges (Level 2)
23 Feb 2013 European Commission – Delegated regulation on regulatory technical standards on colleges for CCPs (Level 2)
23 Feb 2013 European Commission – Regulatory technical standards on capital requirements for central counterparties (Level 2)
23 Feb 2013 European Commission – Regulatory technical standards on indirect clearing arrangements and the clearing obligation (Level 2)
23 Feb 2013 European Commission – Regulatory technical standards on requirement for central counterparties (Level 2)
23 Feb 2013 European Commission – Implementing technical standards to be maintained by CCPs (Level 2)
27 Jul 2012 European Union – EMIR framework legislation (Level 1)
24 Sep 2009 FSB – Report to G20 leaders on improving financial regulation
25 Sep 2009 G20 – Leaders’ statement the Pittsburg summit