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MiFID 2 Inducements Q&A updated

Article 13 Inducements of the MiFID II Delegated Directive has created a wide diversity of reactions from puzzled head-scratching to fearful wailing from the equity analyst community. Readers will be aware that research must now be classified as paid-for and justified Research or essentially advertising that may be received for free. The Research to Marketing […]

MiFIR packaged trades all wrapped up

ESMA has published an opinion on the treatment of packaged trades under MiFIR’s Article 32 trading obligation. Article 28 mandates that derivatives subject to the trading obligation (TO) are traded regulated markets, OTFs, MTFs or third country equivalents. There has been widespread concern with regard to packaged trades, the elements of which are best traded […]

MiFIR trading obligation Post-It

ESMA has published the official register for the Trading Obligation for derivatives under MiFIR.  Although not quite in time for the commencement of the obligation, the register lays out: the derivatives classes subject to the obligation, the applicable trading venues, jurisdictions for which equivalence has been granted and the start dates for Categories 1-4. The register will […]

No LEI – No Problemo

ESMA has delivered a Christmas surprise in the shape of a six month forbearance period in respect of LEIs under MiFIR. Article 13(2) MiFIR prohibits an investment firm from transacting any reportable trade with a client, without first obtaining their LEI. The gift horse’s dentistry is not entirely flawless, the following condition must be met: […]

FFX Margin- all that is solid melts into air

A brief spotlight through the fog swirling around the upcoming obligation to exchange margin on forward foreign exchange. There was a widespread, if only whispered, expectation that a 7/8 November ESMA Board of Supervisors meeting would result in an official announcement of forbearance. While the EU has no equivalent mechanism to the CFTC’s enthusiastic use […]

EU OTC Derivatives Market: Reports of its death are greatly exaggerated?

On 19 October 2017, ESMA published its “first-time overview” of the EU derivatives market – a study of the size of the EU derivatives market based on aggregated data sourced from the 6 EU-authorised trade repositories. The analysis takes the most updated values of all derivatives contracts with open interest at the end of 24 […]

EMIR = CFTC – better late than never

On 13 October 2017, the CTC and the EU announced substituted compliance determinations in respect of margin requirements for OTC derivatives. The determinations accept that the CFTC’s Final Margin Rule and EMIR’s risk mitigation and margin requirements are sufficiently comparable on a substantive outcomes basis. For those interested in reading the full text, we recommend […]

MiFID II Update: Trading Obligation to Commence ‘Early’ in 2018

Introduction On 28 September 2017, the European Securities and Markets Authority (“ESMA”) submitted its final report containing draft Regulatory Technical Standards (“RTS”) on the trading obligation for derivatives under MiFIR with respect to interest rate swaps (“IRS”) and credit default swaps (“CDS”) to the European Commission (“EC”).  The EC has three months to decide whether […]

ESMA proposes Cat 3 clearing delay

ESMA has today published a consultation paper requesting responses to a proposal which seeks to provide additional time for market participants with limited volume to comply with the clearing mandate under EMIR. If approved, the proposal would delay the compliance date for Category 3 entities by two years. Category 3 comprises FCs and NFC + AIFs […]

EMIR clearing mandate expands beyond G4

The EC has today published an RTS and accompanying annex adding three more currencies to the EMIR IRS clearing mandate. The RTS specifies obligations for fixed-to-float interest rate swaps and FRA’s in: Swedish Krona, Polish Zloty and Norwegian Krone. It delineates phase-in periods conforming to the existing clearing counterparty classifica tion: Category 1 (clearing members)- […]

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