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UK EMIR Regulations Published

On 5 August 2013, the Financial Services and Markets 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No.2) Regulations 2013 (the “Regulations”) were published, together with an explanatory memorandum.

The Regulations are implemented in response to EMIR and the regulatory technical standards on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, and risk mitigation techniques for OTC derivatives contracts not cleared by a CCP.  EU Regulations take automatic effect within EU Member States without transposition into domestic law.  However, Member States are obliged to ensure that domestic law is compatible and consistent with EU Regulations and may need to facilitate certain provisions with supplementary domestic legislation.

The majority of the Regulations come into force on 26 August 2013.  In the main, they facilitate the segregation of indirect client (i.e. a client of a client of a clearing member) assets and positions on the failure of a clearing member. They also require recognised CCPs and recognised clearing houses to maintain recovery plans specifying the measures they will take if the continuity of their services is disrupted, and to have loss-allocation rules in order to protect their position in the event that their solvency is threatened.

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