Treasury has made the Financial Services and Markets Act (FSMA) (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (the EMIR Regulations). The EMIR Regulations come into force on 1 April 2013 and implement into UK law much of the EU’s Level 2 EMIR Regulation (the EU Regulation). The EMIR Regulations:
- amend FSMA to make the provisions concerning clearing houses compatible with EMIR. The EMIR Regulations create a new category of clearing house, “recognised central counterparties (RCCPs)”, which are those CCPs which are subject to, and recognised pursuant to the provisions of, the EMIR Regulations. Some provisions of FSMA will no longer apply to these bodies, which will often be subject to similar provisions in the EU Regulation;
- amend the Companies Act 1989 in relation to the provisions on segregation and portability of accounts in the EU Regulation;
- amend the FSMA (Recognition Requirements for Investment Exchanges and Clearing Houses) Regulations 2001 to disapply certain requirements in relation to RCCPs, and set out the requirements that RCCPs must meet to gain recognition as such;
- designate the Bank of England (BoE) as the competent authority under the EU Regulation for CCPs. In most cases the Financial Conduct Authority (FCA) is the competent authority for financial and non-financial counterparties, trading venues, TRs and clearing members of CCPs. The Prudential Regulation Authority (PRA) has certain competent authority functions in relation to persons authorised by it. FCA gets powers to obtain information, and impose penalties for contravening the EU Regulation. The EMIR Regulations also cater for applications and notifications to FCA under the EU Regulation;
- give BoE enforcement powers in relation to acquisition of control over CCPs;
- enable ESMA to gain access to telephone and data traffic records and make on-site inspections to enable it to carry out its EMIR-related duties. In each case a court must authorise this; and
- make consequential amendments to primary and secondary legislation, transitional and saving provisions and provide for a review of the EMIR Regulations before 1 April 2018 and subsequent reviews at least every five years.