27 July 2017
download the report now

EU pushes through OTC regulation

04 July 2012  |  7028 views  |  0 EU building, Brussels

The Council of the European Union has adopted a regulation requiring financial firms to clear over-the-counter derivatives contracts through a central clearing counterparty and report them to trade repositories.

The regulation, which will apply from the end of 2012, is aimed at increasing transparency in the OTC derivatives markets and shielding other market participants from the fall-out of a major counterparty collapse.

Adoption of the regulation follows an agreement reached with the European Parliament, which was passed at first reading on 3 July.

To be authorised, a CCP will have to hold a minimum amount of financial resources in the form of a mutualised default fund to which members of the CCP have to contribute

Trade repositories would have to publish aggregate positions by class of derivatives under the watchful eye of the European Securities and Markets Authority (Esma), which will be responsible for the surveillance of trade repositories and for granting and withdrawing their registration.

Esma will also be responsible for the identification of contracts subject to the clearing obligation, while national competent authorities will be responsible for authorisation and supervision of CCPs. CCPs from third countries will be subject to checks and balances undertaken by Esma.

If a contract is not eligible for clearing by a CCP, the regulation requires the application of different risk management techniques, including the exchange of collateral and the holding of additional capital.

The obligation to clear OTC derivatives contracts through a CCP and report them to trade repositories applies to financial firms, while non-financial firms will only be subject to the clearing obligation, provided their OTC derivatives positions reach specified clearing thresholds, to be set by Esma and the Commission

The regulation also provides for multilateral trading platforms or exchanges to have open access to any CCP to clear OTC derivatives transactions, and vice versa, subject to technical and safety requirements.

Read the full ruling:» Download the document now 612.1 kb (PDF File)

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

EU Parliament votes through OTC rules

EU Parliament votes through OTC rules

29 March 2012  |  7196 views  |  1 comments
FSB establishes LEI and CCP working groups

FSB establishes LEI and CCP working groups

11 January 2012  |  10827 views  |  0 comments
BofE's Tucker calls for CCP reform

BofE's Tucker calls for CCP reform

25 October 2011  |  5611 views  |  1 comments
OTC clearing rules to spur big tech spending - Tabb

OTC clearing rules to spur big tech spending - Tabb

29 September 2011  |  8208 views  |  0 comments
Dodd-Frank will push 60% of OTC volumes to central clearing

Dodd-Frank will push 60% of OTC volumes to central clearing

13 July 2011  |  12081 views  |  0 comments
Thomson Reuters moves to meet bank uncertainty over OTC rule shake-up

Thomson Reuters moves to meet bank uncertainty over OTC rule shake-up

11 July 2011  |  9059 views  |  0 comments
European OTC market far smaller than claimed - study

European OTC market far smaller than claimed - study

20 April 2011  |  8246 views  |  0 comments
ISDA issues RFP for commodity derivatives trade repository

ISDA issues RFP for commodity derivatives trade repository

25 March 2011  |  10265 views  |  0 comments
Iosco supportive of switch from OTC to exchange-based trading

Iosco supportive of switch from OTC to exchange-based trading

18 February 2011  |  10351 views  |  1 comments
EC bids to tame 'wild west territory' of OTC derivatives and short selling

EC bids to tame 'wild west territory' of OTC derivatives and short selling

15 September 2010  |  8444 views  |  0 comments
Xtrakter plans European trade repository

Xtrakter plans European trade repository

08 July 2010  |  8515 views  |  0 comments
Major dealers outline next steps in OTC clean-up

Major dealers outline next steps in OTC clean-up

03 March 2010  |  10095 views  |  0 comments
DTCC calls on lawmakers to mandate use of central trade reporting utility

DTCC calls on lawmakers to mandate use of central trade reporting utility

09 October 2009  |  6712 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.worldpaymentsreport.comvisit vasco.com/news/PSD2-compliant-solutionsvisit www.niceactimize.com

Top topics

Most viewed Most shared
UK judge blocks £14bn class action suit against MastercardUK judge blocks £14bn class action su...
10816 views comments | 7 tweets | 6 linkedin
PayPal strikes deals with Chase and CitiPayPal strikes deals with Chase and Citi
10312 views comments | 10 tweets | 6 linkedin
Yet more deals announced in payments sectorYet more deals announced in payments secto...
9756 views comments | 7 tweets | 21 linkedin
Machines could take over 30% of bank jobs: McKinseyMachines could take over 30% of bank jobs:...
9736 views comments | 28 tweets | 28 linkedin
Wells Fargo Control Tower to map customer's digital footprintsWells Fargo Control Tower to map customer'...
8398 views comments | 7 tweets | 5 linkedin