Financial Market
Financial law academy - how to avoid circularity
Thursday, 29 May 2014 10:48


Clearing arrangements as an indicator of whether a contract qualifies as a financial instrument? Manifest error in assumptions...


Clearing threshold calculation under EMIR - ESMA explains what conglomerates are made of
Friday, 23 May 2014 14:21


It needs to be recalled that positions taken by third-country non-financial entities in the same group as the non-financial counterparty, which would be non-financial counterparties if they were in the EU, count for the calculation of the EMIR clearing threshold.


Global conglomerates, EU-based subsidiaries thereof are relatively small, may be particularly affected.


ESMA in its EMIR Q&As update of 21 May 2014 (ESMA/2014/550) has underlined in this context that the group to which the non-financial counterparty belongs, includes subsidiaries, sisters and parent companies of the non-financial counterparty wherever the ultimate parent company is established. 


This clarification is rather obvious, however, its regulatory origin and rank removes any remaining ambiguities.


See more on the clearing threshold calculation under EMIR...



Clarification on the cumulative use of exemptions under MiFID II
Friday, 23 May 2014 10:05


ESMA expressed the view that "the execution of orders in financial instruments between two non-financials directly and without any further intermediation by third parties as ancillary activity is not covered by the term 'dealing on own account when executing client orders' and would therefore not prevent the persons concerned from using the exemptions under paragraphs (d) and (j) of Article 2(1) MiFID II."


See more on MiFID II exemptions:


1. dealing on own account (Article 2(1)(d)),


2. ancillary activity (derivatives trader exemption - Article 2(1)(j)).


EMIR frontloading - serious regulatory risk
Wednesday, 14 May 2014 10:02


Frontloading - the term involved with EMIR Regulation should seriously worry derivatives players these days.


Excess margin risk of the clearing client - individual account much better than omnibus
Tuesday, 06 May 2014 00:00


The manner in which the excess margin is dealt with by the clearing broker depends on whether the clearing client has an omnibus or individual client account.


Ban on re-use of collateral collected as initial margin
Thursday, 01 May 2014 00:00


Firms implementing re-use, re-pledge or re-hypothecation of initial margin as an essential component of their business models will have to reconsider strategies. Collateral transformation services may also be affected.


Concentration limits on collateral pursuant to EMIR draft RTS
Sunday, 27 April 2014 10:12


Pursuant to the draft RTS, depending on the assets' class, the concentration limits on initial and variation margins range from 10 to 50%. Non-financials below a clearing threshold shouldn't bother.


The two distinct MiFID II exemptions for EU ETS operators
Saturday, 26 April 2014 19:58


The EU ETS operators probable don't put to much weight whether they trade in the spot market or in emissions derivatives markets (particularly given the availability of financial products such as "daily futures" for instance), nevertheless, from regulatory point of view under MiFID II draft Directive each of these markets will be covered by distinct exemption. 


Each of these exemptions have its own strict perimeters, which must be observed, unless EU ETS operator intends to apply for a MiFID licence.


EMIR dispute resolution procedures under EFET ERMTA and ISDA Protocol - dual approach
Friday, 25 April 2014 10:37


Industry master agreements differentiate between the "standard" dispute resolution procedure on the one hand and the process designed specifically for resolving EMIR-mandated issues on the other. What are their inter-dependencies?


Physically-settled commodity derivatives - regulatory mess
Sunday, 13 April 2014 17:02


Is it really physically-settled gas and power forwards traded on multilateral trading facilities (MTFs) are 'financial instruments' for MiFID purposes?


Physically settled derivatives in MiFID II - prepare for fundamental change
Saturday, 05 April 2014 12:43


Only physically-settled oil and coal commodity derivatives contracts as well as REMIT wholesale energy products deserved special treatment in the new financial market architecture created by MiFID II and MiFIR. All others traded on an OTFs will fall under financial instruments regulation.




Guarantees and branches - key elements for third-country interest in EMIR
Thursday, 27 March 2014 22:34


EMIR cross-border issues (to be clear, the circumstances under which the EMIR clearing obligation, risk mitigation techniques and margin requirements apply to contracts between two non-EU entities) have been finally settled and published on 21 March 2014 in the Official Journal.


It is already known which guarantees in the extra-EU circulation are subject to EMIR rules.


See commentary on the issue.


The authorisation of the first European CCP does not cover emission allowances
Saturday, 22 March 2014 12:27


The authorisation under EMIR Regulation of Nasdaq OMX Clearing AB by the Finansinspektionen in Sweden as the first EU-based CCP on 18 March 2014 has limited impact on the European carbon market since the scope of the notification does not cover emission allowances.


MiFID II finally settled - EU ETS installations' operators exempted
Tuesday, 18 March 2014 20:51


A specific exemption for operators with compliance obligations under the EU ETS Directive has been inserted in MiFID II compromised text of February 2014.

To remain exempted the said operators, however, mustn't provide any investment services or apply a high frequency algorithmic trading technique.


There is also a separate exemption for dealing on own account or providing other investment services in emission allowances as an ancillary activity, but in this case an annual notification to the financial authority is required.


EMIR - procedural strategy for clearing and collateral intra-group exemptions
Wednesday, 05 March 2014 21:25


Company's groupings qualifying as non-financial counterparties currently below the clearing threshold under EMIR Regulation, considering clearing and collateral exemptions for intra-group transactions as valuable alternative for their businesses, may face a dilemma whether to make the appropriate submissions to relevant authorities for exemption only the grouping crosses the threshold value or immediately initiate this procedure for future potential use.


Wednesday, 05 March 2014 09:33


There is no requirement to ensure that the TRN reported under EMIR has the same value as the Transaction Reference Number reported under MiFID.


EMIR contains also a requirement to assign a Unique Trade Identifier (UTI) which is unique but the issues how it should be generated or by whom are not specified legally.



EMIR reporting compliance strategy - delegated reporting
Wednesday, 19 February 2014 10:46


When it comes to EMIR reporting compliance strategy the fundamental choice for market participants is whether to report derivatives themselves or to delegate reporting to their counterparty or another service provider.


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