European Market Infrastructure Regulation

ClassificationClearing and Account SegregationIntra-Group Exemptions (Margining)Portfolio Reconciliation and Disputes ResolutionTransaction Reporting

The European Market Infrastructure Regulation 648/2012 (EMIR), as amended, is the European Commission’s response to the commitment by G20 countries to address risks related to the OTC derivative markets. EMIR is directly applicable in all European Union member states – as well as applying globally to certain transactions and counterparties outside the EU.

The purpose of the regulation is to increase transparency in the derivatives market and to reduce systemic risk by reducing counterparty credit risk and operational risk. The main requirements under EMIR are:

  • Central clearing for certain classes of OTC derivatives
  • Application of risk mitigation techniques for non-centrally cleared OTC derivatives
  • Exchange of collateral and adequate capital to cover the exposures arising from certain OTC derivatives not cleared by a Central Clearing Counterparty (CCP)
  • A framework to enhance the safety of all Central Clearing Counterparties (CCPs) and Trade Repositories (TRs)
  • Mandatory reporting and delegated reporting in certain circumstances