RegTech Intelligence 
In the past week, two key events have occurred in the EMIR space. Firstly, ESMA responded to the Commission’s statement of intention not to allow a delay to the introduction of ETD reporting. Secondly, ESMA also finalised its draft technical standards on EMIR extraterritoriality. The effects of both should be good news for firms implementing EMIR, but there remain some uncertainties outstanding.
Recently, the Commission wrote to ESMA all but rejecting its request for more time to issue detailed standards on trade reporting for exchange-traded derivatives. This was not a surprise to the industry, but many had hoped for the publication of more detailed standards. ESMA has now come back to the Commission, saying that though it accepts their decision not to delay the February start date for ETD reporting, it still intends to issue guidance, likely in the form of Q&As. Additional clarification of this sort will be welcomed by firms, but without a delay to the deadline it creates the prospect that firms are caught with additional requirements before February.
Following consultation, ESMA has also finalised its draft extraterritoriality standards for EMIR. The first draft of these caused some concern, as it threatened to extend the scope of EMIR to many firms operating outside the EU. Two types of transactions were to be caught: transactions between Union branches of third country banks, and transactions between entities ‘guaranteed’ by EU banks to the tune of €8 billion or more.
The rules governing the former scenario, covering EU branches, remain unchanged in the technical standards. However, the term ‘guarantee’, in the second scenario, has been heavily clarified. In particular, respondents to the consultation were concerned that CDS could count towards the threshold. These have been clearly scoped out, on the basis that EMIR is designed to make those transactions safer anyway. In fact, the only thing that now counts towards the threshold is an ‘explicit documented legal obligation’. This significantly reduces the scope of the definition (and thus of EMIR as a whole), though some things are still kept in a grey area, such as implicit guarantees and letters of comfort.
Therefore, firms can be glad that ESMA has listened to their input on this issue. However, it’s still full steam ahead for February 2014, just with a few less bumps in the road.