PRIMER: Emir 2.2

Author: Olly Jackson | Published: 10 Sep 2018

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 the...