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EMIR- the sequel

The EC has published a speech by Jonathan Hill, its financial markets chief, introducing the public hearing of the EMIR review, as previewed here. Lord Hill took the opportunity to indicate a number of new milestones on the long and winding road of EMIR implementation- summarised below:

  • The Commission has finalised its discussions with ESMA regarding the final draft RTS for the central clearing of IRS. The first “blueprint” clearing rules could be in place as soon as April 2016. The counterparty category phase-in will still apply.
  • The Commission is close to implementing the extension of transitional relief for EU pension funds from the central clearing obligation. The Commission invites comment as part of the review as to whether this 2 year period will be sufficient.
  • Draft RTS on margin for non cleared trades are expected from ESMA within the “next few months”. Lord Hill acknowledges the delay, but points to the achievement of a (necessarily) unprecedented consistency in global standards. The Commission anticipates following the internationally agreed timetable beginning in late 2016, with a phase-in based on counterparty categorisation.

Perhaps more ominously, and with scant regard to regulatory fatigue, Lord Hill concludes by asking “Will this review result in an “EMIR II”?”. He answers, “To be honest, this is by no means yet certain.”  The Commission is not planning a change to the fundamental objectives to the Regulation, but should have the “confidence to adapt the existing framework” if existing rules are not proportionate to risks, or if improvements to the goal of financial stability can be made. While there is (currently) no prospect of EMIR becoming a Basel-esque Regulatory Dynasty, it is clear that the EC is prepared to act on the results of the review. The public consultation period closes on 13 August 2015.

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