In March 2015, the European Central Bank
was defeated in the European Court of Justice after attempting
to restrict euro-denominated clearing to the eurozone and away
from the UK. The new European Market Infrastructure Regulation
(Emir) effectively means the EU finally has its wish after more
than three years of waiting.
What is it?
Emir regulates over the counter
derivatives, central counterparties (CCPs) and trade
repositories and came into force in August 2012. Six years on,
the size of CCPs has grown and the cross-border dimension has
changed, but more pivotal is the UK’s decision to
withdraw from the EU, placing a greater importance on the role
of third-country CCPs given that 75% of centrally-cleared
interest rate derivatives denominated in euros are cleared in
the UK. This has forced European regulators to act.
Originally, Emir changed the way derivatives were traded and
executed, moving clearing eligible transactions out of