EMIR : A Landmark Regulation with far-reaching Impacts on the EU Derivatives Business

Abstract

Frédéric de Brouwer’s overview of the European Infrastructure Market Regulation (“EMIR”) is both timely and particularly relevant to in-house counsel in financial services. The clearing and reporting requirements applied to OTC derivatives are examined including some transitional measures that the industry might need to take. Mr de Brouwer calls upon the EU to quickly reach similar regulatory agreements with other G20 countries following progress with the USA. Like the Dodd-Frank Act in the US, EMIR will largely reshape OTC derivatives markets in Europe. Beyond the costs of the reform, among others the requirement of collateral for non-cleared transactions, EMIR constitutes a major operational challenge for derivative markets actors: IT investment, adaptation of back and middle office processes, and important amendments to the legal documentation. As there are still a significant number of regulatory interpretation questions left unanswered, in-house lawyers are requested to validate some uncertain assumptions. They must also act beyond their usual role of advisers ; they have to demonstrate organization and project management skills, notably for the legal re-documentation phase of the project.