Transcript EMIR – From present to future - Henning Schwabe, Arendt

EMIR – from present to future
Central clearing, legal obligations, margin requirements
Henning Schwabe, Partner, Arendt & Medernach
ABBL EMIR Conference 20 November 2014
Table of Contents
1. Introduction
2. General Overview
3. Clearing
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4. EU regulatory framework for securities market infrastructure
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1. Introduction
3
Table of Contents
1. Introduction
1.1 A wave of regulatory requirements
1.2 Why EMIR?
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1.3 High-level Timeline
4
1.1 A wave of regulatory requirements
UCITS IV
UCITS V
AIFMD
UCITS VI
etc.
Global Distribution Rules
Asia (Singapore, Hong Kong)
Switzerland (FINMA)
etc.
Global Reporting /
Disclosure Rules
 Basel II
 Solvency II
 FATCA
 etc.
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Luxembourg
MiFID II & MiFIR
EMIR
PRIPs
U.S.
Dodd-Frank

The financial crisis of 2007/08 was in part due to the lack of
transparency in the trading and processing of OTC derivatives  It
highlighted the need for data standards and management of
counterparty risk for OTC instruments

The global impact of this crisis required collective action by governments
around the world and hence the issue was taken up by the G-20 leaders
at the 2009 summit in Pittsburgh
“All standardized OTC derivatives contracts should be traded on exchanges or
electronic trading platforms […] and cleared through central counterparties (CCP)
[…] OTC derivative contracts should be reported to trade repositories. Noncentrally cleared contracts should be subject to higher capital requirements.”

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The aim is to improve transparency in the derivatives markets, mitigate
systemic risk and protect against market abuse
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1.2 Why EMIR?
1.3 High-level Timeline
2013
2010
2009
20072008
Financial
crisis
7
September
G20 in
Pittsburgh
15 September
EU Proposal of
EMIR
2014
12 February
10 January
Reporting obligation
2012
to TRs
ITS entered
29 March
18 March
into force
Adopted by the EU
1st CCP approved
15 March/
Parliament
15 September 12 May
27 July
Back loading
RTS entered
Publication
reporting start date
into force
16 August
11 August
Entered into force
Collateral reporting
and daily mark-to30 September
market valuations
Deadline for draft
18 September
technical standards
Draft RTS on clearing
31 December
G20 deadline
2015
February
Expected
entry into
force of the
RTS for the
clearing of
Interest
Rate Swaps
(IRS)
2. General Overview
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Table of Contents
2. General overview
2.1 Legal framework
2.2 Some legal texts regarding clearing
2.3 Recap
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2.4 Scope
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2.1 Legal framework (1/2)
Penalties
Member
States
Development of ITS and RTS
EMIR Regulation
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ESMA
European
Union
2.1 Legal framework (2/2)
Regulatory
Technical
Standards
EMIR
Implementing
Technical
Standards
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
Regulation (EU) No 648/2012 of the European Parliament and of the
Council of 4 July 2012 on OTC derivatives, central counterparties and
trade repositories (EMIR)

EBA Final Draft Regulatory Technical Standards on Capital Requirements
for Central Counterparties under Regulation (EU) No 648/2012
(EBA/Draft/RTS/2012/01) of 26 September 2012

Implementing technical standards (ITS) published on 21 December 2012
in the Official Journal of the European Union and entered into force on 10
January 2013
 with regard to the format of the records to be maintained by central
counterparties
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2.2 Some legal texts regarding clearing (1/2)

Regulatory technical standards (RTS) published on 23 February 2013 in the Official Journal of
the European Union and entered into force on 15 March 2013
 on capital requirements for central counterparties
 on requirements for central counterparties
 on indirect clearing arrangements, the clearing obligation, the public register, access to a
trading venue, non-financial counterparties, risk mitigation techniques for OTC derivatives
contracts not cleared by a CCP

RTS published on 28 May 2013 in the Official Journal of the European Union and entered into
force on 17 June 2013 on colleges for central counterparties

Joint committee of the European Supervisory Authorities: Consultation Paper -Draft regulatory
technical standards on risk-mitigation techniques for OTC-derivative contracts not cleared by a
CCP under Article 11(15) of Regulation (EU) No 648/2012 of 14 April 2014

ESMA Consultation Paper on the Clearing obligation under EMIR (N°1) for Credit Default
Swaps (CDS) OTC Derivatives of 11 July 2014, amended version published on 17 July 2014

ESMA Final Report on Draft technical standards on the Clearing Obligation for Interest Rate
Swaps (IRS) OTC Derivatives of 1 October 2014
Note: ESMA issued on 24 October 2014 an updated Q&A on the implementation of EMIR
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2.2 Some legal texts regarding clearing (2/2)
2.3 Recap
All
derivative
contracts
Reporting obligation
retrospective
Trade repository
OTC
derivative
contracts
Derivative contracts
Clearing / riskmitigation obligation
Risk mitigation
Clearing
Clearing
member
ESMA
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CCP
Systemic risk monitoring
Systemic risk reduction
Increase of market and
price transparency
Mitigation of counterparty and operational risk
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Client
2.4 Scope
EU Entities
Financial Counterparty
Non EU
Entities
Non Financial Counterparty
FC
NFC +
NFC -
Banks, Insurances,
investment firms, UCITS,
pension funds, AIFs
“Systemically
important” NonFinancial
Counterparty
entering into “nonhedging” activities
in derivatives
above the clearing
threshold
Not “systemically
important” NonFinancial
Counterparty
entering into
derivatives
positions for
“hedging” activities
only
Exemptions:
- Bank of International Settlements, member of ESCB and other entities involved with the management of public debt
- Pension scheme arrangements (until 5/08/15)
- Intragroup transactions (on a permanent basis)
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Non EU counterparties
that would be subject to
the clearing obligation if
they were established in
the Union will have to
clear relevant OTC
transactions via CCPs if
the contract has a direct,
substantial and
foreseeable effect within
the Union
3. Clearing
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Table of Contents
3. Clearing
3.1 Simple example
3.2 General overview
3.3 Client clearing structure chart
3.4 Simple contractual overview
3.5.1 Who decides which OTC derivatives must be
cleared?
3.5.2 OTC derivatives subject to clearing
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3.5 OTC derivatives subject to clearing
3.5.3 Market participants for whom central clearing
will become mandatory based on ESMA’s Final
Report
3.5.4 Frontloading
3.5.5 Further outlook
3.6 Non-financial counterparties and clearing
3.6.1 When do non-financial counterparties have to
comply with the clearing obligation?
3.6.2 Non-financial counterparties: obligation
and threshold
3.7 Central counterparties (CCPs)
3.7.1 Central counterparties (CCPs) – Overview
3.7.2 List of CCP’s authorised to offer services and
activities in the Union
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© Arendt & Medernach 2014
Table of Contents
Table of Contents
© Arendt & Medernach 2014
3.8 Margin requirements
3.8.1 Margin requirements for non-centrally cleared
OTC derivatives
3.8.2 Margin requirements for centrally cleared OTC
derivatives
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3.1 Simple example
Simple bilateral trade:
Cleared trade:
A
A
B
B
CCP

Central counterparty (CCP) means a legal person that interposes itself between the counterparties to the contracts
traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer

Clearing means the process of establishing positions including the calculation of net obligations, and ensuring that
financial instruments, cash, or both, are available to secure the exposures arising from those positions

Financial counterparty (FC) means investment funds, credit institutions, insurance/reinsurance undertakings, UCITS,
AIFs and pension funds

Non-financial counterparty (NFC) means an undertaking established in the Union other than FCs
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A and B might be a FC and / or a NFC
3.2 General overview
Indirect client clearing:
Client clearing:
Party B (Indirect
Client)
Party B
(Client of Clearing
Member)
Clearing
Member
CCP
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Party A
(Clearing Member)
Clearing
Member
CCP
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Party A
(Clearing Member)
Client
3.3 Client clearing structure chart (1/3)
Party B
(Client of Clearing
Member)
 Party B’s Clearing Member is
Party A
So in fact there is only 1
Clearing Member i.e. Party A
Party A
(Clearing Member)
CCP
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Clearing
Member
 Party A holds its own account
separate from the account
held for Party B
So there is, at Clearing
Member level, an internal
segregation between Party
A’s and Party B’s Account
3.3 Client clearing structure chart (2/3)
Party A
(Client of Clearing
Member)
Party B
(Client of Clearing
Member)
Clearing
Member
Clearing
Member
CCP
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 Party A and Party B are
clearing their transcation
via the same Clearing
Member
 Of course the Clearing
Member needs to apply
the segregation rules and
therefore needs to keep
a separate account on
behalf of Party A and one
on behalf of Party B
3.3 Client clearing structure chart (3/3)
Party A
(Client of Clearing
Member)
Party B
(Client of Clearing
Member)
Clearing
Member
Clearing
Member
CCP
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Party A and Party B are
clearing their transaction
via different Clearing
Members.
3.4 Simple contractual overview (1/3)
General Agreement
Appendix for
centrally
cleared OTC
derivatives
Appendix for
non-centrally
cleared OTC
derivatives
Terms and conditions for
business of the individual
CM and CCP
Individual Appendices re.
specific CM & Client
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3.4 Simple contractual overview: ISDA (2/3)
ISDA Master Agreement
ISDA/FOA Client
Cleared OTC
Derivatives
Addendum
ISDA EMIR
Protocols
Terms and conditions for
business of the individual
CM and CCP
Individual Appendices re.
specific CM & Client
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3.4 Simple contractual overview: BdB DRV* (3/3)
German Master
Agreement for financial
Derivative Transactions
(DRV)
Annex to the DRV
for transactions to
be cleared by a
central
counterparty
EMIR Appendix to
the abovereferenced DRV
Terms and conditions for
business of the individual
CM and CCP
Individual Appendices re.
specific CM & Client
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*Bankenverband deutscher Banken (Deutscher) Rahmenvertrag /
German Bank Association Master Agreement
3.5 OTC derivatives subject to clearing
3.5.1 Who decides which OTC derivatives must be cleared?
Approach
Top down
ESMA
ESMA’s role:
CCP?
Identification of classes
of OTC derivatives which
should be subject to the
clearing obligation but for
which no CCP has yet
received authorisation.
ESMA
Public
Register
Bottom up
Assessment of the
suitability of the
notified classes to the
clearing obligation
Notification that a CCP
was authorised to
clear a certain class of
OTC derivatives
EU Commission
NCA
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Endorsement
of ESMA RTS for
those classes of
OTC derivatives
that should be
subject to the
clearing obligation
ESMA
CCP
Info provider
 Classes of OTC
derivatives to be cleared
 CCPs authorised to
clear or recognised for
the purpose of clearing
 Date by which clearing
obligation takes effect
and phase in
implementation
 Classes of OTC for
which CCPs have been
authorised to clear
 Minimum Remaining
maturity
 CCPs notified to ESMA
by NCAs
 ESMA published on 1st October 2014 its final report of the draft
RTS on the clearing obligation for Interest Rate OTC Derivatives
that will be submitted to the European Commission for
endorsement.
 The third section of the Draft RTS covers the determination of the
following interest rate derivatives classes which should be subject
to mandatory clearing:
 Basis swaps denominated in EUR, GBP, JPY, USD;
 Fixed-to-float swaps denominated in EUR, GBP, JPY, USD;
 Forward rate agreements denominated in EUR, GBP, USD;
and
 Overnight index swaps denominated in EUR, GBP, USD.
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3.5.2 OTC derivatives subject to clearing
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
Category 1: Clearing Members of a recognised or authorised CCP listed on the
Public Register – 6 months after the RTS enter into force.

Category 2: FC and AIFs that are non-financial counterparties above the clearing
threshold (NFCs+), which are not included in Category 1 and which belong to a
group for which the aggregate month-end average notional amount of non-centrally
cleared derivatives over a certain 3 month period (i.e. the 3 months preceding the
entry into force of the RTS, excluding the month of entry into force) is above €8
billions – 12 months after RTS enter into force.

Category 3: FCs and other NFC+ AIFs that have a low level of activity in uncleared
derivatives and which are not included in Category 1 or 2 – 18 months after the
RTS enter into force.

Category 4: NFCs that are not included in Category 1, 2 or 3 – 36 months after the
RTS enter into force.
*Source: ESMA Final Report: Draft technical standards on the Clearing Obligation –
Interest Rate OTC Derivatives (01/10/2014)
© Arendt & Medernach 2014
3.5.3 Market participants for whom central clearing will become
mandatory based on ESMA’s Final Report* (1/2)
3.5.3 Market participants for whom central clearing will
become mandatory based on ESMA’s Final Report* (2/2)
 N.B.: Where a contract is entered into between two
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counterparties included in different categories of counterparties,
the date from which the clearing obligation takes effect for that
contract shall be the later of the two.
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*Source: ESMA Final Report: Draft technical standards on the Clearing Obligation –
Interest Rate OTC Derivatives (01/10/2014)
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
The minimum remaining maturity for Categories 1 and 2 counterparties
are the same for contracts entered into or novated before the date of
publication of the RTS in the Official Journal, 49.5 years for basis swaps
and fixed-to-float IRS contracts and 2.5 years for foward rate agreements
and overnight index swaps. Contracts entered into or novated on or after
the publication of the RTS are subject to a 6 month minimum remaining
maturity.

For Category 3 the minimum remaining maturity is 50 years for basis
swaps and fixed-to-float IRS classes and 3 years for forward rate
agreements and overnight index swaps.

Counterparties falling within Category 4 are not subject to frontloading,
e.g. frontloading is not applicable where at least one of the counterparties
is a non-financial counterparty (NFC+ or NFC-).
*Source: ESMA Final Report: Draft technical standards on the Clearing Obligation –
Interest Rate OTC Derivatives (01/10/2014)
© Arendt & Medernach 2014
3.5.4 Frontloading*
3.5.5 Further outlook
 ESMA is currently also developing regulatory technical standards
(RTS) for credit default swaps (CDS) following the same logic as
for the interest rate swaps (IRS). These new RTS which will
probably be submitted to the European Commission for
endorsement in the near future.
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© Arendt & Medernach 2014
 ESMA also published on 1 October a consultation paper on draft
RTS it has developed under EMIR for the clearing of foreignexchange non-deliverable forwards (“ESMA/2014/1185”). This
paper provides explanations on the draft regulatory technical
standards establishing a clearing obligation on a class of foreignexchange non-deliverable forward (FX NDF) OTC derivatives.
3.6 Non-financial counterparties and clearing
3.6.1 When do non-financial counterparties have to comply
with the clearing obligation?

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Clearing thresholds values for the purpose of the clearing obligation:
derivative contracts
threshold
credit derivative
EUR 1 billion in gross notional value
OTC equity derivative
EUR 1 billion in gross notional value
OTC interest rate derivative
EUR 3 billion in gross notional value
OTC foreign exchange derivative
EUR 3 billion in gross notional value
OTC commodity derivative and all other
OTC derivatives
EUR 3 billion in gross notional value
Breach of threshold in one product class entails breach in all classes
© Arendt & Medernach 2014

3.6.2 Non-financial counterparties: obligation
and threshold
Qualified as Financial Counterparty
(Investment firm; credit institution; insurance undertaking; assurance undertaking; reinsurance undertaking; UCITS; AIF)?
Yes
No
Has the OTC derivative class been
defined by ESMA to be subject to the
clearing obligation?
Do the positions in OTC derivative
contracts exceed the thresholds?
No
Yes
No
Yes
Yes
Clearing by a CCP
Risk Mitigation
35
No
© Arendt & Medernach 2014
Has the OTC derivative class
been defined by ESMA to be
subject to the clearing
obligation?
3.7 Central counterparties (CCPs)
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
Conduct of Business
 Participation requirements
 Transparency
 Segregation and portability

Prudential requirements
 Exposure management
 Margin requirements
 Default fund
 Liquidity risk controls
 Default waterfall
 Collateral requirements
 Investment policy
 Default procedures
 Review models, stress testing and back testing
 Settlement
© Arendt & Medernach 2014
3.7.1 Central counterparties (CCPs) - Overview
3.7.2 List of CCP’s authorised to offer services and
activities in the Union (1/2)
Name of the CCP
Identification Code of CCP Established in the Union Country of
or in a Third Country establishment
(LEI)
Nasdaq OMX Clearing AB
54930002A8LR1AA UCU78In the Union
European Central
Counterparty N.V.
724500937F740MH CX307
3
KDPW_CCP
2594000K576D5CQ XI987 In the Union
4
Eurex Clearing AG
1
2
5
6
7
8
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Cassa di Compensazione e
Garanzia S.p.A. (CCG)
LCH.Clearnet SA
European Commodity
Clearing
LCH.Clearnet Ltd
529900LN3S50JPU
47S06
In the Union
In the Union
Sweden
Finansinspektionen
Netherlands
Poland
Germany
In the Union
R1IO4YJ0O79SMW
VCHB58
In the Union
France
529900M6JY6PUZ9
In the Union
Germany
In the Union
Source: ESMA List of Central Counterparties authorised to offer services and activities
in the Union (03/11/2014)
De Nederlandsche
Bank (DNB)
Komisja Nadzoru
Finansowego (KNF)
8156006407E264D
F226TOH6YD6XJB
17KS62
Competent authority (if
established in the Union)
Italy
United
Kingdom
Date of authorisation
18 March 2014
1 April 2014
8 April 2014
Bundesanstalt für
10 April 2014
Finanzdienstleistungs aufsicht
(Bafin)
Banca d’Italia
20 May 2014
Autorité de Contrôle
22 May 2014
Prudentiel et de Résolution
(ACPR)
Bundesanstalt für
11 June 2014
Finanzdienstleistungs aufsicht
(Bafin)
Bank of England
12 June 2014
© Arendt & Medernach 2014
No
3.7.2 List of CCP’s authorised to offer services and
activities in the Union (2/2)
10
11
38
Keler CCP
529900MHIW6Z8O
TOAH28
In the Union
CME Clearing Europe Ltd
6SI7IOVECKBHVY
BTB459
In the Union
CCP Austria
529900QF6QY66Q
Abwicklungsstelle für
Börsengeschäfte GmbH
(CCP.A)
In the Union
12
LME Clear Ltd
213800L8AQD59D3 In the Union
JRW81
13
BME Clearing
5299009QA8BBE2
OOB349
14
OMIClear - C.C., S.A.
5299001PSXO7X2J
X4W10
In the Union
In the Union
Source: ESMA List of Central Counterparties authorised to offer services and activities
in the Union (03/11/2014)
Hungary
United
Kingdom
Central Bank of
Hungary (MNB)
4 July 2014
Bank of England
4 August 2014
Austria
Austrian Financial Market 14 August 2014
Authority (FMA)
United
Kingdom
Bank of England
Spain
Portugal
3 September 2014
Comisión Nacional del 16 September 2014
Mercado de Valores
(CNMV)
Comissão do Mercado
de Valores Mobiliários 31 October 2014
(CMVM)
© Arendt & Medernach 2014
9
3.8 Margin requirements
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
This concerns FCs and NFCs+, hereafter referred to as ‘Counterparties’.

Counterparties requirement to exchange variation margin (VM) on a daily basis and
in full should apply from 1 December 2015 (in line with international standards, i.e.
BCSBS-IOSCO framework).

Counterparties may agree that where the total initial margin (IM) calculated to be
exchanged for all non-centrally cleared OTC derivatives between counterparties at
group level is equal to or lower than € 50 million, they may agree that no initial
margin will be exchanged and that they will hold capital against their exposure to
their counterparties.

Counterparties may agree not to post IM or VM where the total collateral to be
exchanged between them is less than or equal to € 500.000.

IM will be posted gross on a counterparty potfolio (in contrast to net for cleared
trades).
*Source: Joint committee of the European Supervisory Authorities: Consultation Paper -Draft
regulatory technical standards on risk-mitigation techniques for OTC-derivative contracts not
cleared by a CCP under Article 11(15) of Regulation (EU) No 648/2012 (14/04/2014)
© Arendt & Medernach 2014
3.8.1 Margin requirements for non-centrally cleared OTC
derivatives* (1/3)
40

IM requirements don’t apply to transactions where at least one of the
counterparties aggregate month-end average notional amounts of non-centrally
cleared derivatives for June, July and August in a given year is below € 8 billion.

Physically settled FX fowards and swaps including those associated with the
exchange of principal in currency swaps are to be exempt from IM requirements.
VM is still applicable to such contracts.

Covered bonds issues and covered pools don’t need to post IM or VM in case
certain conditions are satisfied.

The IM requirements apply to all new contracts entered into from 1 December
2015. No mandatory retrospective application.

Re-hypothecation of IM should not be permitted.

Eligible collaterall which meets the IM and VM requirements includes cash, high
quality government and corporate bonds, shares in major stock indices and gold.
*Source: Joint committee of the European Supervisory Authorities: Consultation Paper -Draft
regulatory technical standards on risk-mitigation techniques for OTC-derivative contracts not
cleared by a CCP under Article 11(15) of Regulation (EU) No 648/2012 (14/04/2014)
© Arendt & Medernach 2014
3.8.1 Margin requirements for non-centrally cleared OTC
derivatives* (2/3)
3.8.1 Margin requirements for non-centrally cleared OTC
derivatives* (3/3)
IM requirements to be phased in as follows:
 From 01/12/15 to 30/11/16: any counterparty belonging to a group
whose aggregate month-end average notional amount of noncentrally cleared derivatives for June, July and August 2015 exceeds
€ 3 trillion.
 From 01/12/17 to 30/11/18: any (…) August 2017 exceeds € 1.5
trillion.
 From 01/12/18 to 30/11/19: any (…) August 2017 exceeds € 0.75
trillion.
 From 01/12/19 on: any (…) August 2017 exceeds € 8 billion.
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*Source: Joint committee of the European Supervisory Authorities: Consultation Paper -Draft
regulatory technical standards on risk-mitigation techniques for OTC-derivative contracts not
cleared by a CCP under Article 11(15) of Regulation (EU) No 648/2012 (14/04/2014)
© Arendt & Medernach 2014
 From 01/12/16 to 30/11/17: any (…) August 2016 exceeds € 2.25
trillion.
3.8.2 Margin requirements for centrally cleared OTC
derivatives*
 Eligible collaterall which meets the IM and VM requirements
includes cash, high quality government and corporate bonds,
shares in major stock indices and gold.
 The amount which has to be transferred as VM is being
determined by the concerned CCP. It should however be enough
to collateralise the underlying transaction.
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*Source: Joint committee of the European Supervisory Authorities: Consultation Paper -Draft
regulatory technical standards on risk-mitigation techniques for OTC-derivative contracts not
cleared by a CCP under Article 11(15) of Regulation (EU) No 648/2012 (14/04/2014)
© Arendt & Medernach 2014
 The amount which has to be transferred as IM is being determined
by the concerned CCP. It should however be enough to
collateralise the underlying transaction.
4. EU regulatory framework for securities market
infrastructure
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Table of Contents
© Arendt & Medernach 2014
4. EU regulatory framework for securities market infrastructure
4.1 EU regulatory framework for securities market
infrastructure
4.2 EMIR & MiFID II – the overlap
44
4.1 EU regulatory framework for securities market
infrastructure (1/2)
 EMIR together with MiFID II (& CSDR) are anticipated to enhance
the safety and soundness of the financial system.
© Arendt & Medernach 2014
 They will form the framework in which systematically important
securities infrastructures are subject to common rules on a
European level.
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Step 1:
MiFID II & MiFIR regulate trading
venues, i.e. MTFs*, OTFs**, where
trading takes place;
Step 2:
EMIR regulates central
counterparties; and
Step 3:
CSDR regulates central securities
depositories, who are responsible for
settlement of securities transactions.
*Multilateral trading facilities
** Organised trading facilities
© Arendt & Medernach 2014
4.1 EU regulatory framework for securities market
infrastructure (2/2)
 G20 agreed that trading in standardised OTC derivatives:
 (i) should move to exchanges or electronic trading platforms,
where appropriate (MiFID II) and
 (ii) should be cleared through central counterparties (EMIR).
 The provisions in MiFID II require trading in suitably developed
derivatives to occur only on eligible platforms, that is, RMs*,
MTFs, or OTFs**. This requirement is consistent with the
requirement to central clearing OTC derivatives under EMIR.
 Article 29 (1) MiFIR requires the operator of a regulated market to
ensure that all transactions in derivatives that are concluded on
that regulated market to be cleared by a CCP.
47
* Regulated markets
** Article 28 MiFID II
© Arendt & Medernach 2014
4.2 EMIR & MiFID II – the overlap
APPENDIX
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 ‘CCP’ means a legal person that interposes itself between the
counterparties to the contracts traded on one or more financial
markets, becoming the buyer to every seller and the seller to every
buyer.
 ‘clearing’ means the process of establishing positions, including
the calculation of net obligations, and ensuring that financial
instruments, cash, or both, are available to secure the exposures
arising from those positions.
 ‘OTC derivative’ or ‘OTC derivative contract’ means a derivative
contract the execution of which does not take place on a regulated
market as within the meaning of Article 4(1)(14) of Directive
2004/39/EC or on a third- country market considered as equivalent
to a regulated market in accordance with Article 19(6) of Directive
2004/39/EC.
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 ‘financial counterparty’ means an investment firm authorised in
accordance with Directive 2004/39/EC, a credit institution authorised
in accordance with Directive 2006/48/EC, an insurance undertaking
authorised in accordance with Directive 73/239/EEC, an assurance
undertaking authorised in accordance with Directive 2002/83/EC, a
reinsurance undertaking authorised in accordance with Directive
2005/68/EC, a UCITS and, where relevant, its management company,
authorised in accordance with Directive 2009/65/EC, an institution for
occupational retirement provision within the meaning of Article 6(a) of
Directive 2003/41/EC and an alternative investment fund managed by
AIFMs authorised or registered in accordance with Directive
2011/61/EU.
 ‘non-financial counterparty’ means an undertaking established in
the Union other than ‘CCP’ and ‘FC’.
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
‘clearing member’ means an undertaking which participates in a CCP
and which is responsible for discharging the financial obligations arising
from that participation.

‘MiFID II’ means Directive 2014/65/EU of the European Parliament and of
the Council of 15 May 2014 on markets in financial instruments and
amending Directive 2002/92/EC and Directive 2011/61/EU (recast).

‘MiFIR’ means Regulation (EU) No 600/2014 of the European Parliament
and of the Council of 15 May 2014 on markets in financial instruments
and amending Regulation (EU) No 648/2012.

‘CSDR’ means Regulation (EU) No 909/2014 of the European Parliament
and of the Council of 23 July 2014 on improving securities settlement in
the European Union and on central securities depositories and amending
Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012
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 Thank you for your attention
The information provided in this presentation shall give you an overview of the legal and regulatory requirements in Luxembourg and the European Union
without being claimed to be exhaustive or being considered as legal advice. Arendt & Medernach has made every effort to use reliable, up-to-date and
comprehensive information and analysis, but all information is provided without warranty of any kind, express or implied.
No part of this presentation may be published, reproduced, transmitted or otherwise distributed in any form or by any means, e.g. electronic or mechanical,
without the written permission of the author.
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Thank you for your attention!
Contact us

Henning Schwabe
 Partner
 Investment Management
 Tel : (+352) 4078 78 525
 Email : [email protected]