Simpler, more efficient rules for derivatives markets

We welcome the improvement of the functioning of the European Market Infrastructure Regulation (EMIR), adopted in 2012 following the financial crisis. The proposed changes were adopted by a large majority in plenary today.

Werner Langen MEP, Rapporteur on the changes to EMIR, said: “Parliament supports the Commission's proposal for reform and its attempts, in the light of experience, to make the regulation simpler and more efficient. In particular, we have tried to simplify and optimise the legislation for non-financial counterparties - companies whose main activity is not investment banking -  by reducing their administrative burden for clearing and reporting obligations.”

“On the question of pension funds, which are currently exempt from the clearing obligation, Parliament is more ambitious than the Commission and the Council. In order to comply with the 2009 G20 agreements and to improve our risk management on derivatives markets, we need to find a solution as soon as possible and put an end to the exemption granted to pension funds,” added Langen.

Langen ends by affirming "that the European Parliament has managed to adopt a good, balanced and ambitious position today."

EMIR implements the 2009 G20 commitment to increase the stability of over-the-counter (OTC) derivatives markets in the EU. Over-the-counter derivatives are financial market contracts that are privately traded directly between two parties, without going through an exchange. Financial products such as swaps and forward rate agreements – which are used to counterbalance risks – are almost always traded in this way.

The main objective of EMIR is to reduce systemic risk by increasing the transparency of the OTC derivatives market, by mitigating the counterparty credit risk and by reducing the operational risk associated with OTC derivatives. In order to eliminate disproportionate costs and burdens and to simplify rules without putting financial stability at risk, the Commission proposed, in November 2017, a revision of the European Market Infrastructure Regulation which is currently in force.

The adoption by a large majority of the changes to EMIR today gives the Rapporteur and the Shadow Rapporteurs a strong and solid mandate to start negotiations with the Commission and the Council. The trilogues will start under the Austrian Presidency.