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With the aim of helping investment management companies fulfil their obligations under the European regulation on over-the-counter derivatives, central counterparties and trade repositories (EMIR), the AMF has published a guide explaining the implications of this new framework.
A key element in the drive to enhance financial stability and security, the EMIR European regulation applies to users of derivatives.
Investment management companies are therefore subject to new requirements, including a central clearing obligation (i.e. by means of an authorised clearing house) for their transactions in sufficiently-standardised and liquid over-the-counter derivatives. For those over-the-counter derivatives that are not cleared centrally,other techniques designed to reduce operational and counterparty risk must be implemented. Lastly, the regulation introduces a requirement to report transactions for all derivatives.
This pedagogical guide explains these new obligations and gives the key dates in the implementation timetable. While requirements on marking to market and confirmation of the terms of derivatives contracts are already applicable, others will not come into force until 2014 or 2015.
