ESMA has published its final report on regulatory technical standards (RTS) under the European Market Infrastructure Regulation (EMIR) in relation to contracts with a direct, substantial and foreseeable effect within the EU. The final draft RTS clarify that where two counterparties established outside the EU enter into an OTC derivatives contract, but where the EU has not reached a decision on the equivalence of the relevant third country regime, then the contract will be subject to EMIR if (i) either counterparty is guaranteed by an EU financial for a total gross notional amount of at least €8 billion, and for at least 5% of the OTC derivatives exposures of the guarantor, or (ii) the counterparties use EU branches to execute their transactions and would be financial counterparties if they were established in the EU. The RTS will also contain a non-evasion clause. The Commission now has three months (from 15 November) to decide whether to endorse the RTS and must then submit them to the EP and Council. (Source: ESMA Finalises EMIR RTS)