EU Commission Reports on EMIR Treatment of Non-EU Central Banks and Debt Management Offices

On 22 March 2013, the EU Commission published a report on the “International Treatment of Central Banks and Public Entities Managing Public Debt with regard to OTC Derivatives”.

Under Article 1(4) of EMIR, EU central banks and bodies responsible for the management of public debt are exempt from the reporting obligation, the clearing obligation and risk-mitigation techniques for uncleared trades.  However, at the time of adoption of EMIR, there were uncertainties on the treatment of non-EU central banks.  The EU Commission was requested under Article 1(6) of EMIR to analyse the international treatment of central banks and debt management offices with a view to determining whether it was necessary to extend the list of exempted entities under EMIR.

The EU Commission analysed the treatment of central banks and debt management offices under existing and proposed OTC derivatives clearing legislation in the US, Japan, Switzerland, Australia, Canada and Hong Kong.  The report is a useful introductory summary relating to OTC derivatives legislation around the globe.  Its conclusions are summarised below:

Jurisdiction	Clearing Obligation	Reporting Obligation
EU	Exempted	Exempted
US	Exempted	Exempted
Japan	Exempted	Exempted
Switzerland	Will   be exempted	Will   be exempted
Australia	Exemption   envisaged	Exemption   envisaged
Canada	Exemption to be considered but expected	Exemption to be considered but expected
Hong Kong	Exemption envisaged	Exemption envisaged

The Commission concluded that the central banks and debt management offices of the US and Japan should be exempted on the basis that they are two jurisdictions which have finalised rules on OTC derivatives.  As similar rules in Australia, Canada, Hong Kong, Switzerland and other jurisdictions are finalised, the Commission will determine whether an extension to the list of exempted bodies is appropriate.

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