Shearman & Sterling LLP | FinReg | UK Draft Legislation for Post-Brexit EMIR 2.1 Published
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  • UK Draft Legislation for Post-Brexit EMIR 2.1 Published
    07/25/2019
    A draft U.K. statutory instrument to onshore into U.K. law, post-Brexit, the revised European Market Infrastructure Regulation (known as EMIR Refit) has been published - The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) (No. 2) Regulations 2019.

    EMIR Refit was published in the Official Journal of the European Union on May 28, 2019 and, for the most part, has applied directly across the EU since June 17, 2019.

    The draft Regulations will make amendments to existing U.K. legislation as well as U.K. EMIR and other EU Exit legislation to accommodate certain changes as a result of EMIR Refit. The intention is to ensure that U.K. EMIR is still operable in the U.K. after the U.K. leaves the EU. In particular, the draft Regulations:
    • transfer functions of ESMA to the appropriate U.K. regulator, with the exception of the power to suspend the clearing obligation, which will be transferred to the Bank of England; and
    • extend the exemption for pension funds from the clearing obligation; the U.K. is opting to have a longer extension period than the EU and instead of the exemption expiring in June 2021, the U.K. exemption will expire in June 2023.

    The EMIR Refit provisions that do not come into force before October 31, 2019 are not (yet) being onshored. These are:
    • CCP obligations to provide clearing members with information regarding initial margin requirements and the manner in which initial margin is calculated, which under EMIR Refit, will apply from December 18, 2019;
    • new processes and standards for the reporting of trades by Financial Counterparties on behalf of both counterparties, which, under EMIR Refit, will apply from June 18, 2020;
    • new Trade Repository requirements to establish procedures around data reconciliation, verification and transfer which, under EMIR Refit, will apply from June 18, 2021; and
    • obligations imposed upon clearing members and clients to provide clearing services upon fair, reasonable, non-discriminatory and transparent commercial terms, which, under EMIR Refit, will apply from June 18, 2021.

    View the draft Regulations.

    View the Explanatory Memorandum to the draft Regulations.

    View details of EMIR Refit.

    View details of the U.K.'s implementation of EMIR Refit.

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