On February 12, the United Kingdom Financial Conduct Authority (FCA) updated its webpage on the European Market Infrastructure Regulation (EMIR), about the equivalence decision for derivative transactions in the United States adopted by the European Commission on October 13, 2017. The equivalence decision determined that the rules promulgated by the Commodity Futures Trading Commission on risk monitoring and mitigation for over-the-counter derivatives not cleared by a central counterparty are equivalent to EMIR.
On its webpage, the FCA explains that the EC has confirmed to the FCA that the equivalence decision includes intragroup exemptions under Articles 11(8) and 11(9) of EMIR, and therefore such transactions are exempted from the obligation to exchange collateral. Although the temporary intragroup exemptions that the FCA granted for trades between UK and US firms technically expire on March 2, the EC’s positive equivalence decision allows firms to apply for exemptions with no expiry date.
The FCA has adopted a streamlined process for firms wishing to apply for the new exemption to help alleviate any administrative burdens on such firms. Therefore, UK firms currently benefitting from the temporary intragroup exemption must:
- Notify the FCA of the entity pairs to which the equivalence decision applies; and
- Confirm whether there have been any other changes to the conditions under which the original intragroup exemption was granted.
The FCA’s webpage on EMIR is available here.