EMIR - Central clearing of IRS

The European Securities and Markets Authority (ESMA) opened on May 11th 2015, a consultation seeking views on proposed regulatory technical standards (RTS) on the clearing obligation under Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories (EMIR).

This consultation follows the publication of three consultation papers on the clearing obligation on interest rate derivative classes, credit derivative classes, foreign-exchange non-deliverable forward classes, as well as the publication of a final report on the clearing obligation on interest rate derivative classes, and a feedback statement on non-deliverable forward classes.

This consultation paper provides explanations on the following additional classes of OTC interest rate derivatives that were not included in the first RTS on the clearing obligation for interest rate swaps:

  • fixed-to-float interest rate swaps denominated in CZK, DKK, HUF, NOK, SEK and PLN as well as
  • forward rate agreements denominated in NOK, SEK and PLN.

The consultation paper further provides an overview of the clearing obligation procedure, clarifications on the structure of the classes of OTC interest rate derivatives that are proposed for the clearing obligation and determines the classes of OTC derivatives that should be subject to mandatory clearing with an analysis of the relevant criteria.

The consultation paper further presents the approach for the definition of the categories of counterparties, and the proposals related to the dates from which the clearing obligation should apply per category of counterparties and also provides explanations on the definition of the minimum remaining maturities for the application of frontloading.

The consultation closes on July 15th 2015.

Next Steps

ESMA will consult the European Systemic Risk Board (ESRB) and, where relevant, the competent authorities of third-countries when developing the technical standards on the clearing obligation. The consultation responses will help ESMA to finalise the relevant technical standards to be drafted and submitted to the European Commission for endorsement in the form of a Commission Regulations, i.e. a legally binding instrument directly applicable in all Member States of the European Union.