What is EMIR?
The European Market Infrastructure Regulation (EMIR) has a very similar objective to MiFIR, aiming to “improve transparency and reduce the risks associated” (FCA, Feb 18) with European markets, however it focuses only on derivative markets.
It has its origins from a meeting of the G8 following the 2008 financial crash after it was decided the lack of regulation in the derivative markets contributed to the severity of the financial crash.
The regulation imposes stringent control around firms risk management standards and operations for margining on their open positions. It has also brought a number of off exchange activity on exchange by creating classes of instruments requiring mandatory clearing by a CCP.
The regulation requires the reporting by both counterparties of any derivative (on and off exchange) agreement where the underling is an interest rate, foreign exchange, equity, credit or commodity instrument. It requires complex information on collateral and the value of open positions to be reported.