The financial crisis and collapse of significant market players such as Lehman, Bear Stearns and AIG in 2008 exposed multiple weaknesses in the OTC derivatives market.

 

In September 2009 the G20 leaders agreed on a set of reforms designed to improve transparency, reduce systemic risk and protect against market abuse.

 

Key elements of the reform are that all standardised OTC derivatives will be traded on exchanges or electronic platforms; reported to Trade Repositories (TR); cleared through a Central Counterparty (CCP) and that non-cleared transactions will be subject to risk mitigation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The EU is implementing this through European Market Infrastructure Regulation (EMIR). Similar reform is occurring elsewhere such as Dodd-Frank in US and FINFRAG in Switzerland.

 

EMIR imposes new requirements on all derivatives transactions, whether intra-group, on exchange or OTC, and on all market participants, including corporates and pension funds.

 

These requirements cover transactions from 16th August 2012, with the reporting obligation being effective from 12th February 2014.

 

To learn more about EMIR pleased read our simple guide: