One of the earliest conclusions that EU and global policymakers reached in the light of the financial crisis was that significant reform of the multi-trillion dollar derivatives market was essential to improve financial stability. In particular they were keen to ensure greater transparency – particularly towards supervisors and a significant increase in the use of central clearing.
On 15 September 2010, the European Commission proposed regulation on OTC (Over-the-Counter) derivatives, central counterparties and trade repositories. EMIR was adopted on 4 July 2012 and entered into force on 16 August 2012. A revision of the EMIR framework, designed to be more proportionate to smaller financial counterparties, is currently underway.
Invest Europe position
Financial institutions will be obliged to clear centrally all of their derivatives transactions, which includes Alternative Investment Funds, but not special purpose vehicles (SPVs). To the extent that private equity funds are undertaking derivatives business they have to comply with other EMIR’s provisions, such as margining requirements.