On 14 April 2014, the Joint Committee of the European Supervisory launched a consultation on draft RTS on risk mitigation for OTC derivatives as required under the European Market Infrastructure Regulation ("EMIR"). EMIR requires parties to derivative contracts that are not cleared through a central counterparty to use risk mitigation techniques. The draft RTS set out risk management procedures for the timely, accurate and appropriately segregated exchange of collateral, procedures for intragroup exemptions and the criteria for identifying practical and legal impediments to the prompt transfer of funds between counterparties.
Responses to the consultation are due by 14 July 2014. The European Supervisory Authorities will prepare final draft RTS for submission to the European Commission by the end of 2014. It is proposed that the RTS will enter into force on 1 December 2015, with a phase-in period of four years to mitigate the impact on liquidity. It is intended that the requirements will apply to market participants with an aggregate month-end average notional amount of OTC derivatives exceeding €3 trillion from that date. From 1 December 2019, the requirements would apply to any counterparty which is part of a group whose aggregate month-end average notional amount of OTC derivatives exceeds €8 billion.
The consultation paper is available at:
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