On 14 March, in cooperation with the Irish Debt Securities Association (IDSA), ISDA responded to the Irish Department of Finance consultation on member state discretions in EMIR. The response highlights concerns about a number of aspects of Irish implementation indicated in the consultation paper. ISDA advise that it is imperative that in implementing EMIR fully and properly, the legislature does not impose obligations that go further than what is required by the Regulation itself, and that are in excess of what is being introduced in other EU jurisdictions. In this regard, ISDA points particularly to the proposals for:

  • a Statement of Compliance and Skilled Person's report, which will place an unequal burden on an Irish NFC- compared to that of equivalent entities in other Member States;
  • a power of the Central Bank to give directions, including a direction “to take or refrain from taking or to prohibit actions, including entering into derivatives contracts”, which we consider an extraordinary power for the Central Bank to have in respect of entities that are not regulated financial services providers or their related undertakings, and which we believe would have a serious detrimental effect on the ability of Irish counterparties to confirm they have the capacity and power to enter into legally binding derivatives contracts; and
  • criminal sanctions for breach of EMIR, which we consider to be disproportionate and out of line with the sanctions regime in other Member States.

IDSA notes the position taken by the Department that all FX forward transactions with a settlement date beyond the spot date, even if entered into for commercial hedging purposes, are to be considered as within the definition of a derivative under EMIR. In its letter of 14 February 2014 ESMA publicly signalled that, if it was legally possible, NCAs should not apply EMIR to certain FX forwards and certain commodity forwards. IDSA requests that the Department of Finance and the Central Bank should provide public assurance that they will follow ESMA’s approach and not apply EMIR to such contracts.