PwC's Managing upstream risk: Regulatory reform review - An asian perspective November 2013 | Page 11

EMIR, which came into force in 2012, applies
currently only to legal entities established in
the EEA. But on 15 November 2013, ESMA
delivered draft proposals to entities located
outside the EEA (third country entities, or
TCEs) into EMIR scope under defined scenarios.

Key points of proposed rules

The EMIR third country rule proposals will
extend EMIR OTC derivative clearing and
non-centrally cleared margin, among other
obligations, to:

do not substantially amend ESMA’s established
third country proposals, but provide more help
for derivative users outside Europe:

Excerpt from PwC UK’s news release “EU’s OTC
derivative rules spread outside Europe”

1. within the EEA: all trading conducted
between branch offices of two TCEs that
would be classified under EMIR as Financial
Counterparties
2. outside the EEU: OTC derivative trading
conducted between two TCEs where one
counterparty’s trading is guaranteed by
an EU Financial Counterparty, when the
guarantee is over certain thresholds.

ESMA consulted on most of its third country
rule proposals in March 2012 and most recently
in July 2013. The final rules published today

ESMA has also provided clarification on a
number of interpretation issues raised by
respondents to earlier consultations.

Equivalence relief: more kill than cure?

A TCE caught by these proposals can opt to
apply its home country rules instead of EMIR if
it is established where the EU has determined
the OTC derivative rules to be equivalent to
EMIR. However, the first EMIR equivalence
assessments, provided by ESMA to EU rule
makers in September and October, were either
heavily conditioned or incomplete. Equivalence
will be of limited relief until jurisdictions
outside the EEA comp