On March 8, the European Supervisory Authorities (which includes the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) published final draft regulatory technical standards (RTS) in relation to the European Market Infrastructure Regulation (EMIR).
The draft RTS covers risk-mitigation procedures for over-the-counter (OTC) derivatives contracts not cleared by a central counterparty. The draft RTS requires counterparties to exchange both initial and variation margin on OTC derivatives that are not centrally cleared. The draft RTS also sets out a list of eligible collateral for the margin requirements.
The draft RTS provides for a proportionate implementation of the requirements and is proposed to come into effect on September 1. The requirements will initially apply to the largest counterparties from September 2016, with a four-year phase in for the remaining counterparties.
A copy of the draft final RTS is available here.
The EBA’s press release is available here.