In a press release dated December 2, 2015 the European Securities and Markets Authority (ESMA) announced that firms will have to clear certain classes of interest rate swaps starting from June 21, 2016. This marks an important milestone in implementing the EU’s post-financial crisis derivatives regulation – the European Market Infrastructure Regulation (EMIR) and follows the G20 commitment to clear all standardized OTC derivative contracts, where appropriate, through central counterparties.

The incoming obligation will cover the following classes of OTC interest rate derivatives denominated in the G4 countries:

  • Fixed-to-float interest rate swaps (also known as plain vanilla);
  • Float-to-float swaps (also known as basic swaps);
  • Forward rate agreements; and
  • Overnight index swaps.