On Tuesday 4 October, the European Commission presented a draft delegated regulation to bring in regulatory technical standards for risk-mitigation techniques for over-the-counter derivative contracts.
The 'EMIR' regulation (648/2012) brought in obligations this year for transactions in standard derivative products to be cleared by central counterparties. For derivatives still traded over-the-counter, there must be a bilateral exchange of collateral in order to protect the counterparties from the potential default of the other.
The draft delegated act determines: - the risk management procedures, including the levels and types of collateral and segregation arrangements; - the procedures for the counterparties and the relevant competent authorities to follow when applying exemptions for intra-group over-the-counter derivative contracts; - the applicable criteria on what should be considered a practical or legal impediment to the prompt transfer of own funds and repayment of liabilities arising from over-the-counter derivative contracts between counterparties belonging to the same group.
The Commission states that it did not fully take up the joint recommendations of the three European financial advisory authorities. The European Parliament and the Council of the EU have three months to approve or reject the draft delegated regulation. (Original version in French by Mathieu Bion)