EMIR is the centrepiece of the EU post financial crisis reform of derivatives markets and seeks to address perceived issues with counterparty credit risk and transparency. After a long and difficult consultation period, and some way behind other similar global initiatives, the next major piece of the EMIR framework will soon come into effect, which is the requirement for eligible counterparties to post margin on OTC derivative transactions.
These new requirements will affect financial counterparties (which include EU banks, insurers, asset managers and pension funds) and non-financial counterparties with derivative portfolios above the EMIR thresholds and will result in major changes for eligible counterparties, as well as imposing significant liquidity and operational burdens on those counterparties' derivative trading activities.
The upcoming 1 March 2017 deadline will be of immediate concern to all affected counterparties as from this date all new uncleared OTC derivative transactions will be subject to the requirement to post variation margin in accordance with the new rules. This will be a "big-bang" moment in the market and affected clients should begin taking immediate steps to ensure compliance in advance of the deadline. To learn more, please access our full briefing on the new rules.