On February 27, 2017, a Commission Delegated Regulation amending the RTS on margin requirements for uncleared derivatives was published in the Official Journal of the European Union. The amending RTS relate to the phase-in of the variation margin requirements for intra-group transactions and supplement the European Market Infrastructure Regulation. EMIR requires counterparties to uncleared OTC derivative transactions to implement risk mitigation techniques to reduce counterparty credit risk. The original RTS prescribe how margin should be posted and collected and the methodologies by which the minimum amount of initial margin and variation margin should be calculated, as well as specifying a list of securities eligible as collateral for the exchange of margins, such as sovereign securities, covered bonds, specific securitizations, corporate bonds, gold and equities.
The original RTS on risk mitigation techniques for uncleared OTC derivatives was published in the Official Journal of the European Union on December 15, 2016. This correction is due to a technical error in the adoption process, which resulted in the omission of two paragraphs on the phase-in of variation margin requirements to intra-group transactions. The amending RTS update the original RTS by inserting two new paragraphs specifying the phase-in schedule for variation margin requirements for intra-group transactions. Where an intra-group transaction takes place between a Member State entity and a third country entity, the exchange of variation margin is not required until three years after entry into force of the amending RTS, but only where there is no equivalence decision for that third country. Where there is an equivalence decision, the variation margin requirements will apply either four months after the entry into force of the equivalence decision, or according to the timeline outlined in the original RTS, whichever is later.
The amending RTS enter into force on February 27, 2017 and apply retroactively from January 4, 2017 so as to coincide with the dates of the original RTS.
The amending RTS is available at: http://ec.europa.eu/transparency/regdoc/rep/3/2017/EN/C-2017-149-F1-EN-MAIN-PART-1.PDF and the original RTS is available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1485801630726&uri=CELEX:32016R2251 .
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