On November 17, 2021, ISDA and five other trade bodies (the European Association of Co-operative Banks, the European Banking Federation, Futures Industry Association, the Global Financial Markets Association and the Nordic Securities Association) wrote to the European Commission and European Supervisory Authorities to request they extend the current temporary derogations from clearing and margining requirements for intragroup transactions where at least one group entity is in a non-EU jurisdiction.
While the European Market Infrastructure Regulation (EMIR) provides for an exemption from clearing or margin requirements (the latter in classes of derivatives that are not subject to a clearing obligation) for intragroup transactions, trades between group entities where at least one group entity is in a non-EU jurisdiction do not meet the definition of intragroup transaction for this exemption unless the non-EU jurisdiction in question has been found equivalent under EMIR article 13.
To date, eight such equivalence decisions, covering agencies in seven non-EU jurisdictions, have been adopted for rules governing bilateral, non-cleared derivatives transactions. However, no article 13 equivalence decisions for the clearing obligation have been adopted.
The derogations expire on June 30, 2022.
Intragroup transactions are crucial for the ability of EU financial and non-financial groups to operate, compete (with other comparable groups) and make capital available in non-EU jurisdictions, and manage risks on a centralized basis. Intragroup transactions are also vital to enable non-EU financial and non-financial groups to provide the capital needed to underpin investment within the EU 27, and to manage risks associated with this activity. The application of clearing and margin requirements would have a significant impact in operational and collateral terms on EU firms operating globally and non-EU firms investing in the EU.
Documents (1) for Industry Urges EU to Extend Relief for Cross-Border Intragroup Transactions
Latest
Transition to Mandatory Central Clearing
US Treasury securities sit at the heart of global financial markets and serve as one of the primary forms of high-quality collateral across derivatives and securities financing markets. The transition to mandatory central clearing of US Treasuries therefore has implications...
ISDA Publishes Updated ISDA SIMM Governance
ISDA has published an updated version of the ISDA SIMM® Governance Framework, which sets out the principles under which the ISDA Standard Initial Margin Model® operates and the process through which it will be reviewed and amended on a consistent...
ISDA Response to PRA IMA Consultation
On September 18, ISDA, the Association for Financial Markets in Europe, the Institute of International Finance and UK Finance submitted a joint response to the UK Prudential Regulation Authority consultation on adjustments to the internal model approach (IMA) for the...
Calibration Test – IQ September 2026
Calibrating capital requirements is a highly complex undertaking and getting it wrong can have serious consequences. Too much lenience might lead to banks holding insufficient capital to mitigate their risks. But excess conservatism can put balance sheets under strain, forcing...