EMIR

We are no longer in an age of brokers trading shares in a splendid baroque room in Amsterdam, under a willow tree in lower Manhattan, or in the coffee houses of London. We are no longer in an age of imposing 19th century bourgeois edifices lining Europe’s most important boulevards, underscoring the central position of finance - of stocks and bonds - for national economies as a keystone of Victorian social progress. And we are no longer in an age of outbound transfer of European thinking and law about securities finance to nearly every corner of the world – almost no matter what the political structure in place, the idea of marketable securities seems to have won the day. And it carries on, often in unlikely circumstances where the “soil” would have seemed too shallow for this “plant” to take root.

We are in an age where the price discovery of securities is being led by algorithmic computer programs. Most likely, we have been in this age for longer than we realized; certainly, it has been coming on for decades. The Computer Assisted Trading (“CAT”) software developed in Toronto is generally recognized as having been the first such electronic trading system established in a central, regulated marketplace. It was introduced in the now distant year of 1977, a full 40 years ago.

In response to the 2007-2009 financial markets crises, and in line with G20 direction on restoring global economic growth, a primary policy objective of the European Commission was to extend the existing, rather limited regulation of financial market infrastructures (‘FMIs’).

As defined by global regulators, FMIs fall into four categories. These are central securities depositories (‘CSDs’), central clearing houses (‘CCPs’), trade repositories (‘TRs’), and payment systems. The two important regulations developed by the EU in this space are the European Market Infrastructure Regulation (‘EMIR’) and the Central Securities Depositary Regulation (‘CSDR’). This article will discuss the possible implications of leaving the EU specific to these regulations.

The European Securities and Markets Authority (ESMA) and the Commodities Futures Trading Commission (CFTC), ESMA’s US equivalent for futures market oversight, have officially come to agreement over equivalence between the clearing frameworks of the two jurisdictions. It spells the end of a long running dispute between the world’s two largest derivatives markets that has held up the implementation of mandatory central clearing, a key tenet of the G20’s 2009 Financial Reform Programme.

ICE Clear Singapore has received EMIR (European Market Infrastructure Regulation) authorisation from ESMA (European Securities and Markets Authority) to act as a third country CCP (Central Counterparty Clearinghouse). The regulatory regime in Singapore was deemed as equivalent by the European regulator in October 2014 and ICE Clear Singapore, along with fellow Singaporean clearinghouses, The Central Depositary Limited and Singapore Exchange Derivatives Clearing, applied for recognition under EMIR.

Thomas Murray Data Services spoke to Chris Bates, chief commercial officer of Abide Financial, about the firm's activities as a reporting hub across multiple regulations and jurisdictions.

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