One of the objectives of EMIR (the European Market Infrastructure Regulation) is to lower the risk of contagion in the financial system, and in doing so promote an efficient and transparent derivatives market. It's doing this by requiring that clearing and risk management for derivatives go through central counterparties, which are obliged to report essential information related to these derivatives.
In the continuing effort to become compliant with EMIR, many jurisdictions in Europe are discussing adapting their local laws to create a framework for supervising financial conglomerates. Naturally Luxembourg is among these, and going forward we may see the CSSF and the CAA implementing new laws in this area.
Among the new powers the CSSF and CAA could gain are:
- the right to access relevant documents in any form
- the right to request information from the respective parties
- the right to conduct on-site inspections and surveys of the respective parties
- the right to access the respective parties' communications and digital records
- the right to require a party to cease any practice that is not compliant with EMIR
We foresee the possibility that the CSSF and the CAA might be able to sanction in the following cases:
If the party...
- publishes documents or information that is proven to be incomplete, inaccurate, or false
- refuses to provide documents or other information requested
- impedes the CSSF/CAA from exercising their powers of surveillance, intervention, inspection, and investigation
- does not follow an injunction from the CSSF/CAA
The CSSF and CAA could potentially have the following regime of sanctions in their toolkit:
- a warning
- a reprimand
- an administrative fine between €125 and €1.5 million (if the offense has provided a financial benefit then the fine cannot be less than the profit made, nor can it be more than five times the amount)
- a temporary or permanent ban
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.