A Guide to Financial Regulation for Fintech Entrepreneurs

SHEET 10European MarketInfrastructure Regulation

European Market Infrastructure Regulation—The directive regulating central counterparties and trade repositories, and establishing clearing and reporting requirements

Summary

After the crisis, intransparent derivative exposure at banks has been seen as one reason impeding the recovery. Regulators decided that most derivative exposure of banks should be intermediated by tightly supervised clearing houses, regardless of whether it came from derivative exchanges or from the OTC market. They also put in place a reporting requirement for all derivatives trades, regardless of whether they cleared or not.

This regulation establishes the details of those clearing and reporting requirements. It also defines the authorisation process for clearing houses, and the registration process for trade repositories, and it describes the ongoing supervision of both.

Relevance for Fintech Companies

EMIR is directly relevant only for companies active in the derivatives space, so for the standard Fintech company operating in the consumer space it is not particularly important. However, the technical challenges behind the clearing and reporting obligations imposed by EMIR are enormous, and they provide ample opportunity for Fintech/Regtech companies operating in this space.

References

• Regulation EU 648/2012 (EMIR)

The European Market Infrastructure Regulation (EMIR) is 648/2012.

10.1 Definition and Scope

The European Market Infrastructure ...