EMIR: EU Commission publishes legislative proposal for amendment and communication on future proposals

The EU Commission has published a proposal on targeted reforms to the European Market Infrastructure Regulation (EMIR), which are intended to improve the functioning of the derivatives market in the EU and provide simpler and more proportionate rules for OTC derivatives.

Overall, the Commission has concluded that the framework functions well and the proposal is intended to make amendments in a limited number of areas while maintaining all key elements of the framework. The legislative proposal follows the Commission's decision to include a review of EMIR in its Regulatory Fitness and Performance Programme (REFIT) in 2016.

In particular, the Commission proposes:

• streamlined reporting requirements for all counterparties;
• changes for non-financial counterparties (NFCs) so that they will clear only the asset classes for which they have breached the clearing threshold;
• a new clearing threshold for small financial counterparties; and
• a three year temporary exemption for pension funds from central clearing.

Alongside the proposal, the Commission has also adopted a communication setting out its intention to present further legislative proposals to address other issues in derivatives clearing by summer 2017. The further proposal is intended to enhance the common supervisory arrangements for CCPs in relation to, among other things, enhanced supervision at EU level and/or location requirements. The communication deals with challenges for critical financial market infrastructures and further development of the Capital Markets Union (CMU). Among the challenges foreseen by the Commission is the UK's forthcoming withdrawal from the EU and, in particular, the communication highlights euro-denominated interest rate derivative clearing in the UK and clearing of derivatives denominated in other Member States' currencies as being transactions that directly impact the responsibilities of relevant EU and Member States' institutions and authorities.