EC adopted delegated Regulation on margin requirements for non-cleared OTC derivatives

On 4 October 2016 the European Commission adopted a delegated regulation that specifies how margin should be exchanged for OTC derivatives contracts that are not cleared by a CCP. The Commission adopted the draft regulatory standards submitted by the European Supervisory Authorities with amendments.

For those derivatives not centrally cleared EMIR requires bilateral exchange of collateral to mitigate risks. Should one counterparty to the transaction default, the margin collected will protect the non-defaulting counterparty against resulting losses. The draft regulatory technical standards (RTS) under EMIR were submitted jointly by the three European Supervisory Agencies (ESAs). The Commission decided to endorse these standards with certain amendments, in particular concerning the concentration limits for pension scheme arrangements and the timeline for implementation. Today’s decision takes the form of a Delegated Regulation and is now subject to an objection period by the European Parliament and the Council after which it will be published in the Official Journal. The full text of the press release is available here.

The text of the delegated Regulation is available here.

The text of the Annex to the delegated Regulation is available here.

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