The 2008 financial crisis highlighted the significant role played by over-the-counter (OTC) derivatives transactions, which drew these contracts to the attention of regulators. Tighter regulations were called for regarding the extremely high sums involved in positions taken on some of these operations.
In this context, during the 2009 G20 summit, the member states promised to improve the transparency and stability of the derivatives market.
New regulations were therefore put in place to honor this commitment, including the European Market Infrastructure Regulation (EMIR), which came into force on August 16, 2012.
In practical terms, the EMIR looks to reinforce the security and transparency of OTC derivatives. EMIR aims at regulating and supervising Trade Repositories and Central Couterparties (CCPs) in order to ensure the stabilty of the financial system. Thses entities are put under the scrutiny of ESMA (the European Securities ans Markets Authority) and should contribute to introduce:
• Reporting obligation for OTC derivatives.
• Clearing obligation for eligible OTC derivatives transactions.
• Measures to mitigate counterparty credit risk and operational risk for non-centrally cleared OTC derivatives.
The criteria defined by ESMA in order to identify which derivatives are eligible for the mandatory clearing obligation will be notably based on the level of standardization of derivatives contracts, the liquidity of contracts and the daily availability of information relating to contract pricing.


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