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Further explanations about the Recital 20 of EMIR Background The letter of the Commission was issued after the ESMA’s analysis of the frontloading requirement and its request of the Commission’s views on it. It is also important to note that the first authorisation under EMIR of a CCP took place on 18 March 2014. What’s in there? Objective of the Commission with this letter dated 8 July 2104 is to further explain how the frontloading requirement should be used. It is stated in this letter that frontloading can have “negative effects on the functioning of the market, financial stability and systemic risk”. On the basis of the previous statement, the Commission states that the frontloading of OTC derivatives should be avoid- ed when it could lead to the negative factors stated previously. Moreover, the Commission states that the avoidance of those factors could be achieved through the use of the determination of the mini- mum remaining maturities adapted to the specifici- ties of the different classes of OTC derivatives. The Commission further added that the determina- tion of the remaining maturities should be assessed and analysed under the goals pursued by EMIR in general and that, until the RTS is properly put into place, counterparties cannot objectively foresee their frontloading obligation. What’s next? ESMA is expected to submit its RTS to the Commis- sion for adoption in the form of a regulation.

European Commission updates EMIR FAQ Background The European Commission publishes a regularly updated FAQ to address questions relating to Reg- ulation (EU) no. 648/2012 (EMIR). The FAQs are designed to provide clarity on the timing of imple- mentation, the scope of the requirements, and the position of third country CCPs and trade repositories, from the Commission’s perspective. Prior to the update of 10 July 2014, the most recent version was dated 18 December 2013. What’s in there? On the 10 th of July 2014, the European Commission published an updated version of the EMIR FAQ. In the update, the European Commission addresses the question of whether the segregation require- ments apply to non-EU clearing members of EU CCPs providing services to clients, and the response mirrors the response that may be found in the ESMA Q&A published on the same day (CCP Question 8 (i)). What’s next? This document will be continually edited and updat- ed as and when new questions are received. ESMA publishes Consultation Papers on draft RTS on the Clearing Obligation under EMIR Background Under the European Markets Infrastructure Regula- tion (EMIR), ESMA is required to develop regulatory technical standards (RTS) on the clearing obligation for OTC derivatives. With the overarching objective of reducing systemic risk, EMIR introduces the obligation to clear certain classes of OTC derivatives in central clearing houses (CCPs) that have been authorised (European CCPs) or recognised (third-country CCPs) under its frame- work. To ensure that the clearing obligation reduc- es systemic risk, EMIR specifies a process for the identification of the classes of OTC derivatives that should be subject to mandatory clearing. THE DOCUMENT IS AVAILABLE HERE.

What’s next? The ESMA Q&A will be continually edited and up- dated as and when new questions are received.

THE UPDATED ESMA Q&A IS AVAILABLE HERE.

EMIR - Final draft RTS on treatment of clearing members’ exposure to clients Background Under the Capital Requirements Regulation (CRR- Regulation (EU) no. 575/2013), amending the European Markets Infrastructure Regulation (EMIR- Regulation (EU) no. 648/2012), financial in- stitutions acting as clearing members are required to set aside capital against exposures to central counterparties (CCPs) and bilateral exposures for exposures to clients. On 28 February 2014, the European Banking Au- thority (EBA) published the draft regulatory technical standards (RTS) related to the capital requirements for the exposures of the clearing members to their clients. What’s in there? Following a consultation period of ten weeks, the EBA published on 4 July 2014 the final draft reg- ulatory technical standards on the margin periods of risk used for the treatment of clearing members' exposures to clients under Article 304 (5) of the Capital Requirements Regulation (Regulation (EU) no. 575/2013). The draft RTS specify the minimum margin periods of risk (MPOR) that financial institutions acting as clearing members may use as input for the calcu- lation of their capital requirements for exposures to clients. The MPOR are specified in a different manner for different classes of derivatives to be used in both the internal and standardised approaches, therefore covering the full spectrum of derivative types for all counterparty credit risk models. The draft RTS set the MPOR at a level that is equal to whichever is the longer period: the regulatory mini- mum of five days or the liquidation period disclosed by the CCP. What’s next? The RTS still need to be adopted by the European Commission.

THE DOCUMENT IS AVAILABLE HERE.

THE DOCUMENT IS AVAILABLE HERE.

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