On 4 February 2019 the Central Bank of Ireland issued a welcome statement confirming that, pending the entry into force of the EMIR Refit proposal, it will apply its risk-based supervisory powers in a proportionate manner in the day-to-day enforcement of the reporting and clearing obligations under EMIR and MiFIR's trading obligation.
Over the past two years, a long awaited package of reforms to EMIR (commonly known as EMIR Refit) has been working its way through the European legislature. Delays in the legislative process led to concerns in the derivatives market that some of the EMIR Refit amendments (designed to exempt smaller market participants from complying with onerous EMIR obligations that will phase-in this year) will be of limited use, as EMIR Refit will likely enter into force only after these obligations have already phased-in. The chief concerns relate to (i) the phase-in of the EMIR clearing obligation for Category 3 firms, and (ii) the obligation to backload reporting for trades terminated more than five years ago.
The phase-in date for the clearing obligation for so called Category 3 firms under EMIR is 21 June 2019. The EMIR Refit proposal will create a new category of small financial counterparties (SFCs) which are exempt from the clearing obligation. It is expected that many SFCs would be Category 3 firms. In the event that EMIR Refit only enters into force after 21 June 2019, SFCs would need to have clearing arrangements in place and start clearing their derivative contracts on 21 June 2019, but would then be exempted from clearing once EMIR Refit comes into force.
The backloading issue arises from the obligation under EMIR to report derivative transactions entered into on or after 16 August 2012, but terminated before 12 February 2014. The deadline for meeting the backloading obligation has already been postponed from 12 February 2017 to 12...