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 Wednesday 17 February 2021

Updates to the EMIR Margin RTS published in EU Official Journal


Following three drafts of the “final report” outlining various amendments to the bilateral margin requirements under the European Market Infrastructure Regulation (“EMIR Margin RTS”) spanning 14 months, the amendments have been published today in the Official Journal of the European Union (Commission Delegated Regulation (EU) 2021/236) and will enter into force tomorrow – 18 February 2021.

These long-awaited updates were revised along the way to account for updated guidance provided by the Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO) and COVID-19.

The amendments to the EMIR Margin RTS are as follows:-

  1. Permanent exemption from exchanging variation margin for deliverable FX forwards and swaps for non-institution entities: If an entity is not captured by the definition of “institution” under the EU Capital Requirements Regulation (EU) No. 575/2013 (broadly speaking credit institutions (e.g. a bank) or investment firms acting on their own behalf rather than as an agent for a non-institution entity) then it would not be required to collect variation margin for physically settled FX forwards or swaps.
  2. Temporary relief from triggering new margin obligations when novating legacy trades from an entity established in the UK to an EU entity. Legacy transactions which were not already subject to regulatory margin requirements may be novated to counterparties established in the EU without triggering a new margin obligation until 1 January 2022.
  3. Updates to regulatory initial margin phase-in dates: In-scope entities (FCs, NFC+s, SFCs) will be subject to regulatory initial margin from 1 September 2021 (Phase 5) if the aggregate month-end average notional amount (“AMEANA” or “AANA”) for their consolidated group is above EUR 50 billion.  Relevant entities will be in scope from 1 September 2022 (Phase 6) if their AMEANA is above EUR 8 billion.
  4. Extension to temporary exemption for intragroup transactions with a third country entity: This exemption has been extended to 30 June 2022. This is to align the date with the equivalent temporary exemption from clearing obligations for OTC derivatives.
  5. Extension to temporary exemption for single stock equity options and equity index options:  This exemption has been extended to 4 January 2024.  This is to allow continued monitoring by the EU on how other jurisdictions are implementing the margin requirements with respect to these products in order to avoid possible regulatory arbitrage.

Posted by Abigail Harding


Tagged: ISDA negotiation Marginrules UMR

Category: ISDA negotiation


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