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What is a derivative under EMIR?

What is a derivative under EMIR?

A derivative is a financial contract linked to the fluctuation in the price of an underlying asset or a basket of assets. Common examples of assets on which a derivative contract can be written are interest rates instruments, equities or commodities.

What OTC derivatives must be cleared?

Which derivatives are subject to the clearing obligation

  • fixed to-float interest rate swaps (IRS)
  • basis swaps.
  • forward rate agreements.
  • overnight index swaps.

Are FX derivatives reportable under EMIR?

In its guidance (published in the context of the reporting obligations which apply under EMIR), the Central Bank of Ireland provides that, as a temporary measure, FX forwards which settle between T+3 and T+7 are generally not required to be reported for EMIR purposes.

What is portfolio reconciliation of OTC derivatives?

Portfolio reconciliation reports show your open FX and derivatives trades at the close of business on the value date. The purpose of the reports is to give you the opportunity to reconcile your portfolio of outstanding OTC derivatives with Nordea, pursuant to the European Market Infrastructure Regulation (EMIR).

Are FX forwards OTC derivatives?

DCD (Alternative Currency), FX Option, Gold Option, Forward are the OTC (over-the-counter) derivative products that we offer to our customers.

Is central clearing is compulsory in OTC?

The European Commission has today adopted new rules that make it mandatory for certain over-the-counter (OTC) interest rate derivative contracts to be cleared through central counterparties.

Are OTC swaps cleared?

Cleared swaps are over-the-counter (OTC) agreements that are eligible to be cleared by ICE Clear U.S., but which are not executed on ICE Futures U.S. (the “Exchange”) either electronically or on the trading floor.

What are the different types of OTC derivatives?

Types of OTC Derivatives

  • Interest Rate Derivatives: Here, the underlying asset is a standard interest rate.
  • Commodity Derivatives: Commodity derivatives have underlying assets that are physical commodities such as gold, food grains etc.
  • Equity Derivatives:
  • Forex Derivatives:
  • Fixed Income Derivatives:
  • Credit Derivatives:

What is recon process?

Reconciliation is the process of comparing transactions and activity to supporting documentation. Further, reconciliation involves resolving any discrepancies that may have been discovered.

What is the European market infrastructure regulation (emir) for OTC derivatives?

These risks were highlighted during the 2008 financial crisis, when significant weaknesses in the OTC derivatives markets became evident. In 2012 the EU adopted the European market infrastructure regulation (EMIR). The aims were to increase transparency in the OTC derivatives markets

How does Emir reduce the risk of derivatives contracts?

EMIR introduces rules to reduce the counterparty credit risk of derivatives contracts. In particular all standardised OTC derivatives contracts must be centrally cleared through CCPs if a contract is not cleared by a CCP, risk mitigation techniques must be applied

What does EMIR Refit mean for the OTC market?

The Regulation (EU) 2019/834 amending EMIR, EMIR Refit, introduces changes in the OTC regulatory framework. Some of the most relevant aspects include a change on the way to determine which counterparties are subject to the clearing obligation and the inclusion of a mechanism to suspend the clearing obligation.

What does Emir stand for?

Derivatives / EMIR. The European market infrastructure regulation (EMIR) lays down rules on OTC derivatives, central counterparties and trade repositories.