Royal Bank of Scotland

Corporate & Institutional Banking

EMIR Clearing Announcement

EMIR Clearing Standards Published in Official Journal

Information originally drafted December 2015, and updated March 2016

On 1 December 2015 the European Commission published the G4 Rates Clearing Obligation RTS in the Official Journal. The RTS enters into force 20 days following the publication (21 December).

Any in scope derivative trading with Royal Bank of Scotland PLC regardless of sales and client location will be impacted if the counterparty is in scope (ie an FC or NFC+), meaning US and Asia trading activity will be affected as well as Europe.

  • Clearing Obligation Dates: the clearing obligation will take effect on the following dates per counterparty category (with the obligation applying from the later date where counterparty categories differ):

    • Category 1 (clearing members) - 21 June 2016

    • Category 2 (FCs & NFC+ AIFs above 8bn threshold) - 21 December 2016

    • Category 3 (other FCs & NFC+ AIFs) - 21 June 2017

    • Category 4 (other NFC+s) - 21 December 2018

  • Frontloading: category 1 & 2 counterparties that enter into in scope bi-lateral contracts with each other during the frontloading period will be obliged to clear those transactions by the applicable clearing obligation date. Category 2 clients will be asked to sign an Additional Termination Event (ATE) agreement to permit breaking of contracts that cannot be cleared by the required date.  Frontloading ('period B') will take effect from:

    • Category 1 - 21 February 2016

    • Category 2 - 21 May 2016

  • Product Scope: the instruments covered by the initial clearing RTS for IRS are:

    • Vanilla Fixed-Float (EUR, USD, GBP and JPY) 28D-50Y

    • Basis (EUR, USD, GBP and JPY) 28D-50Y

    • FRA (EUR, USD and GBP) 3D-3Y

    • OIS (EUR, USD and GBP) 7D-3Y

  • Exemptions: eligible pension schemes (those that can make the necessary representations via the ISDA representation letter) may make use of the exemption from mandatory clearing until June 2017.  The EC may choose to extend this clearing exemption by a further year to June 2018. Eligible transactions by covered bond issuers benefit from a permanent exemption from mandatory clearing.

  • Equivalence with US: on 16 March 2016 the European Commission (EC) and the CFTC formally accepted the equivalence of their respective regimes for Central Counterparties (CCPs). This ends the uncertainty regarding the use of US-based CCPs by European firms. US CCPs must apply for recognition by EC but the process will be facilitated by cooperation between the EC and CFTC.

  • Client Representation on Clearing Categorisation: RBS has already approached clients in mid 2015 for their clearing categorisation.  In January 2016 our Regulatory Comms team went back out to Category 1 counterparties, and in April 2016 following completion of the 3 month assessment period we will go back out to remaining clients requesting they respond either via the ISDA bilateral letter or Markit ISDA Amend service.  Please see our earlier FAQs on clearing categorisation for more information. Please contact to provide RBS with your representation.

  • Documentation: following provision of clearing category it will be necessary to agree EU Cleared Derivatives Execution Agreements (CDEA) with all non-clearing members (ie non Cat 1).  EU CDEAs are separate to US version and must be separately negotiated.  This is in addition to the ATE for frontloading mentioned above.

  • Other Products Subject to Clearing: mandatory clearing of iTraxx Index CDS (Main & Crossover, EUR, 5Y) and further classes of interest rate swaps (in NOK, SEK and PLN) is also to be phased in following the G4 currencies above, though firm dates are not yet available (CDS RTS was adopted by EC on 1 March 2016).  

Further Information

For further information please see the links below or contact Markets Regulation team.

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