Poll Suggests European Corporates Expect Extension to EMIR Deadline

With the 12 February deadline for the European Market Infrastructure Regulation (EMIR) just a week away, 65% of respondents to a recent poll conducted by Reval said they expect the European Commission (EC) to provide corporates with a relief mechanism for compliance.

The software-as-a-service (SaaS) providers adds that 58% of respondents to its poll admit that they are either not ready to comply with EMIR or do not expect to be ready for three to four months.

In the US, the Commodity Futures Trading Commission (CFTC) issued a series of No-Action relief letters for various derivative-related rules coming into effect under the Dodd-Frank Act. Regarding the single euro payments area (SEPA) regulation, the European Commission (EC) adopted a proposal on 9 January that gives an extra transition period of six months to 1 August 2014 during which payments that differ from the SEPA format can still be accepted.

“Companies seem to be expecting that they will receive some kind of relief from complying with the EMIR deadline next week,” said Guenther Peer, regional vice president, solutions consulting EMEA at Reval.

“With SEPA’s extended transition period and the issuance of No-Action relief letters from the CFTC in the US, it seems that companies have become accustomed to shifting dates for regulatory compliance. This could be the reason why many companies report that they are not ready to comply with EMIR.”

Under EMIR, financial and non-financial counterparties must report on a daily basis all derivatives, including intragroup transactions, to one of the six registered trade repositories.

Aside from the reporting obligation, EMIR requires central clearing for certain classes of over-the-counter derivatives (OTC) derivatives for financial institutions and complex corporates, and the application of risk mitigation techniques for non-cleared transactions.

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