Ambiguities regarding implementation
The draft legislative proposal rises also some general doubts.
Commodity firms taking positions in OTC derivative contracts above information threshold will have to inter alia provide the competent authority “justification for taking those positions”.
EMIR does not, however, specify what will be legal effects of providing such justification.
What will be the consequences, if the non-financial counterparty changes its mind after providing the competent authority the said justification for a specific transaction? Will it be allowed to execute transaction in a different way, than described in the justification?
And, generally, the information required has ex-post or ex-ante character? Will the ‘insufficient’ justification be sanctioned in any way? Will the competent authority have the power to forbid the non-financial counterparty to enter into transaction or to execute a contract if the competent authority considers the transaction systemically important and dangerous to the financial stability of the system?
The EMIR doesn’t provide sufficiently clear answers for the above ambiguities. The regulatory technical standards to be adopted by the Commission with the support of the relevant authorities may be helpful.
But taking into account the strict requirements of the EMIR Regulation the question arises as to the ongoing work and consultation on the emission market oversight measures – are more stringent oversight measures additionally needed?