EMIR – the challenge of mitigating and reducing risk in OTC derivative transactions – H.Schwabe & C.Hoffmann

Discover the new article written by Henning Schwabe & Claudia Hoffmann on “EMIR – the challenge of mitigating and reducing risk in OTC derivative transactions”. This article has been published in the Kluwer ACE Magazine – January 2014. In the light of the financial crisis beginning in 2007 which was caused by a lack of transparency in the trading process of over-the-counter (OTC) derivatives, the G-20 determined at the 2009 summit in Pittsburgh that all standardised OTC derivative contracts should only be traded on exchanges or electronic trading platforms and that they must be cleared by central counterparties (CCPs). Furthermore, the G-20 decided that OTC derivative contracts should be reported to trade repositories (TRs) and that non-centrally cleared contracts should be subject to higher capital requirements than centrally cleared contracts. The US «Dodd-Frank Wall Street Reform and Consumer Protection Act» (Dodd-Frank), signed by President Barack Obama on 21 July 2010 was one of the first regulations concerning the new requirements for OTC derivative contracts determined during the 2009 G-20 summit in Pittsburgh. At a European level, EMIR entered into force on 16 August 2012 and is aimed at monitoring risks arising from OTC derivative contracts and mitigating systemic risk. Table of content of the document: Legal framework Risk monitoring – Different codes to identify the product, the trade and entities – Reporting of counterparty data – Confidentiality? Risk mitigation – Clearing – Risk mitigation techniques – Exchange of collateral Does EMIR impact counterparty limits for UCITS?

Contact an expert