European Market Infrastructure Regulation

The European Market Infrastructure Regulation (EMIR) is a body of European legislation for the regulation of over-the-counter derivatives. It was originally adopted by the EU legislature on July 4, 2012 and came into force on August 16, 2012. Its full technical standards were adopted by the European Commission on December 19, 2012 and came into effect on March 15, 2013.

The regulations include requirements for reporting of derivative contracts and implementation of risk management standards. It established common rules for central counterparties and trade repositories.

The objective of the legislation is to reduce systemic counterparty and operational risk, and help prevent future financial system collapses.

The European Market Infrastructure Regulation (EMIR) is a body of legislation for over-the-counter (OTC) derivatives, central counterparties and trade repositories. EMIR was introduced by the European Union (EU) as implementation of the G20 commitment to reduce systemic, counterparty and operational risk, and increase transparency in the OTC derivatives market. It was also designed as a preventative measure to avoid fallout during possible future financial crises similar to the collapse that followed the Lehman Brothers bankruptcy in 2008.

It establishes common rules for central counterparties, which interpose themselves between involved parties in a contract to serve as the focal point of each trade, and trade repositories, which collect and maintain all records of trades. EMIR requires the reporting of all derivatives, whether OTC or exchange traded, to a trade repository. EMIR covers entities that qualify for derivative contracts in regards to interest rate, equity, foreign exchange, or credit and commodity derivatives. It also outlines three sets of obligations, including the clearing, reporting and risk mitigation of applicable products.

EMIR's set of obligations were designed to take effect on a phased basis over a period of several years.

This page was last edited on 17 November 2017, at 14:30.
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