Financial Market
MiFID II position limits calculation - regulatory monster, I agree
Tuesday, 26 August 2014 14:03


When I first heard an opinion:  "MiFID II - regulatory monster" I used to think of it as a simple affectation.

I used to... Till the moment I came across the ESMA's interpretation of position limits aggregation within the groupings of undertakings. 


Short story – how we went MAD
Friday, 15 August 2014 15:02


The impact of the new regulatory measure is estimated (assuming the threshold of 6 million tonnes a year) that 70 companies would be captured by the requirement to disclose inside information on the carbon market (approximately 56% being energy producer and the rest other industrial emitters) accounting for 70% of the total verified emissions, and 857 companies would be exempted.


EMIR frontloading not in jeopardy?
Friday, 18 July 2014 20:33


The Commissioner Michel Barnier in his letter of 8 July 2014 addressed to ESMA referred to the issue highlighted in "EMIR frontloading - serious regulatory risk".


The key part of the EC letter explains that:


"The determination of remaining maturities should not result, in particular, in the application of the frontloading requirement to OTC derivatives concluded before counterparties could reasonably foresee that those contracts would need to be cleared as a consequence of the frontloading requirement. Such application could jeopardize the principle of legal certainty. In this respect, the Commission considers that before ESMA submits the RTS to the Commission, counterparties cannot reasonably foresee the terms of the frontloading obligation. Moreover, since the RTS may be amended or even rejected before they enter into force, some uncertainty may remain as to the concrete terms of the frontloading requirement until the delegated act adopting the RTS is finally published in the Official Journal."


So, I agree, legal certainty, and, what is evenly important, the viability of projected solutions, mustn't be omitted.


But what is practical and concrete effect of the above clarification? I'm still confused...



Trading obligation for derivatives under MiFIR - clear follow-up to EMIR developments
Saturday, 31 May 2014 11:08


As appears from the latest ESMA recommendations, trading obligation for derivatives under MiFIR regulatory technical standards will be shaped to closely resemble EMIR clearing requirement.


Broadly, the same prerequisites, entities covered, cross-border rules - all this indicates both measures represent  only subsequent stages of the same process, having at its end sistemically important OTC derivatives subjected to the rules of authorised trading venues and cleared.



Financial law academy - how to avoid circularity
Thursday, 29 May 2014 10:48


Clearing arrangements as an indicator of whether a contract qualifies as a financial instrument? Manifest error in assumptions...


Clearing threshold calculation under EMIR - ESMA explains what conglomerates are made of
Friday, 23 May 2014 14:21


It needs to be recalled that positions taken by third-country non-financial entities in the same group as the non-financial counterparty, which would be non-financial counterparties if they were in the EU, count for the calculation of the EMIR clearing threshold.


Global conglomerates, EU-based subsidiaries thereof are relatively small, may be particularly affected.


ESMA in its EMIR Q&As update of 21 May 2014 (ESMA/2014/550) has underlined in this context that the group to which the non-financial counterparty belongs, includes subsidiaries, sisters and parent companies of the non-financial counterparty wherever the ultimate parent company is established. 


This clarification is rather obvious, however, its regulatory origin and rank removes any remaining ambiguities.


See more on the clearing threshold calculation under EMIR...



Clarification on the cumulative use of exemptions under MiFID II
Friday, 23 May 2014 10:05


ESMA expressed the view that "the execution of orders in financial instruments between two non-financials directly and without any further intermediation by third parties as ancillary activity is not covered by the term 'dealing on own account when executing client orders' and would therefore not prevent the persons concerned from using the exemptions under paragraphs (d) and (j) of Article 2(1) MiFID II."


See more on MiFID II exemptions:


1. dealing on own account (Article 2(1)(d)),


2. ancillary activity (derivatives trader exemption - Article 2(1)(j)).


EMIR frontloading - serious regulatory risk
Wednesday, 14 May 2014 10:02


Frontloading - the term involved with EMIR Regulation should seriously worry derivatives players these days.


Excess margin risk of the clearing client - individual account much better than omnibus
Tuesday, 06 May 2014 00:00


The manner in which the excess margin is dealt with by the clearing broker depends on whether the clearing client has an omnibus or individual client account.


Ban on re-use of collateral collected as initial margin
Thursday, 01 May 2014 00:00


Firms implementing re-use, re-pledge or re-hypothecation of initial margin as an essential component of their business models will have to reconsider strategies. Collateral transformation services may also be affected.


Concentration limits on collateral pursuant to EMIR draft RTS
Sunday, 27 April 2014 10:12


Pursuant to the draft RTS, depending on the assets' class, the concentration limits on initial and variation margins range from 10 to 50%. Non-financials below a clearing threshold shouldn't bother.


The two distinct MiFID II exemptions for EU ETS operators
Saturday, 26 April 2014 19:58


The EU ETS operators probable don't put to much weight whether they trade in the spot market or in emissions derivatives markets (particularly given the availability of financial products such as "daily futures" for instance), nevertheless, from regulatory point of view under MiFID II draft Directive each of these markets will be covered by distinct exemption. 


Each of these exemptions have its own strict perimeters, which must be observed, unless EU ETS operator intends to apply for a MiFID licence.


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