Last minute RTS to be rushed through

The just in time legislative supply chain seems to be still working in the EU. On 21 December, the Commission adopted the two Delegated Regulations amending EMIR Regulatory Technical Standards. The EC have published the RTS today:

• The Draft Revised Margin RTS (Margin RTS)
• The Draft Revised Clearing Obligation RTS (Clearing RTS)

A quick refresh of the amendments made by each:

Margin RTS

• Extension of equity options temporary exemption until 4 Jan 2024
• Extension of intragroup transaction temporary exemption until 30 June 2022
• Establishment of a 12 month window (from entry into force) during which UK entities may novate legacy trades to the EU without triggering new margin obligations
• The permanent exemption from the requirement to post/collect VM for both physically settled FX forwards and swaps where one of the counterparties is not an “institution” or third-country equivalent [1]

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[1] “Institution” is defined in point (3) of Article 4(1) of the Capital Requirements Regulation (EU) No 575/2013. Essentially- banks and investment managers.

Clearing RTS

• Extension of intragroup transaction temporary exemption until 30 June 2022
• Establishment of a 12 month window (from entry into force) during which UK entities may novate legacy trades to the EU without triggering new clearing obligations

Note that 30 June 2022 is also the expiry date of the temporary grant of equivalence in respect of UK CCPs (primarily LCH). The EC is not expecting any objections from the Parliament or Council; the intention being that both RTS are fast-tracked for entry into force before the 31 December end of Brexit “transition”.

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