In the five years since Lehman and the financial crisis, a number of measures have been taken to overhaul and regulate OTC derivatives markets. BNP Paribas has released a new summary of developments in international policy frameworks governing OTC derivatives—EMIR in the EU and the Dodd-Frank Act (DFA) Title VII in the U.S.
BNP Paribas notes that final rules for EMIR have not been adopted on the scope of products subject to the clearing obligation, provisions on extraterritoriality, and margin requirements for non-centrally cleared OTC derivatives. EMIR continues to be phased in, with certain risk mitigation technique, portfolio reconciliation, dispute resolution and portfolio compression rules implemented in September and CCP authorizations in October.
The final rules yet to be covered by Dodd-Frank also include margin requirements for non-centrally cleared swaps and extra-territoriality provisions, as well as execution obligations on Swap Execution Facilities (SEFs). Notably, although the implementation of DFA rules hinges on the definition of a U.S. person, the definition itself has not been finalized by the SEC or CFTC. The deadline for the registration of SEFs is coming up in August, as well as the mandatory clearing obligations of third-party sub-accounts, ERISA pension funds and nonfinancial entities.
Upcoming BCBS-IOSCO recommendations are still being discussed at the international level as a set of standards for EMIR and Dodd Frank.
The report suggests that special attention be paid to: connectivity to market infrastructures, review of legal documentation, and a transversal approach to collateral requirements.
The document is available here.
With OTC Derivatives Regs Both Imminent and Unclear, BNP Paribas Releases Report
In the five years since Lehman and the financial crisis, a number of measures have been taken to overhaul and regulate OTC derivatives markets. BNP Paribas has released a new summary of developments in international policy frameworks governing OTC derivatives.