Principal Obligations Under European Market Infrastructure Regulation, Effective Immediately

March 15, 2013

Significant Consequences for Counterparties to Derivatives Contracts

Today, a number of the principal obligations of The European Market Infrastructure Regulation ("EMIR") have entered into force with immediate effect, with wide-ranging consequences for all entities dealing in derivatives related to or affecting the European Economic Area. The specific obligations which kick in today include: 

• notification obligations to responsible authorities for entities whose OTC derivative positions exceed certain thresholds; and
• obligations for counterparties to confirm trades in accordance with specified deadlines.

The obligations set out in EMIR are complex and confusing.  In particular, the obligations imposed by EMIR vary between what are termed "financial counterparties" (broadly, investment firms, banks, insurers, registered UCITS funds, pension funds or alternative investment funds) and "non-financial counterparties" (counterparties to derivatives contracts who are not financial counterparties). 

To assist clients potentially affected by EMIR, we have prepared two complementary client guides, one on the impact of EMIR for financial counterparties and the other on the impact of EMIR for non-financial counterparties.