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EMIR 3 in Polish jurisdiction. OTC derivative instruments

EMIR 3 in terms of the core EMIR regulation – the most important bullet points based on the experience of KIEŁTYKA GŁADKOWSKI KG LEGAL in advising global clients in the Polish jurisdiction in the field of derivative instruments traded over the counter. 1. The essence of the EMIR regulation EMIR (European Market Infrastructure Regulation (EU) 2017/1899 is a regulation of the Council of the European Union and of the European Parliament on over-the-counter (OTC) derivatives, central counterparties and trade repositories. The regulation aims to increase the safety and stability of financial markets in Europe and prevent financial crises. 2. The original version of the Regulation of 2012. The context for the references in EMIR is the 2008 economic crisis, whose consequences proved severe for many European Union Member States. The regulation's point of reference is Article 114 TFEU, which governs the convergence of internal markets. However, Article 114 does not apply to tax regulations, the free movement of persons, or the rights and interests of employees. It recommended strengthening oversight of the EU market, including through the creation of a European system of financial market supervisors responsible for the banking sector, the insurance and occupational pensions sector, and the securities and markets sector. The regulation requires all derivatives, both exchange-traded and over-the-counter, to be transferred to a trade repository. One of the objectives of the 2012 regulation is to mitigate systemic risk, including through increased regulation of clearing and trading. The legal provisions regarding limited risk apply bilaterally and also cover non-EU countries. 3. EMIR Refit of 2019 amending the original regulation The 2019 regulation partially amended the 2012 EMIR regulations with respect to the clearing obligation, its suspension, reporting requirements, risk mitigation techniques related to OTC derivative contracts not cleared by a central counterparty, the registration and supervision of trade repositories, and requirements for trade repositories. Amendments to the 2012 regulation also address definitional issues, including a broad definition of a financial counterparty, which can include, for example, a credit institution, an investment firm, or a central securities depository. The main differences between the original EMIR and the 2019 regulation include changes in access to reported data, aimed at facilitating supervision and risk analysis by supervisory authorities. The regulation changed the scope of reporting obligations, standardizing data formats and expanding the scope of reporting entities. The new regulation also aimed to provide a more proportionate approach to regulation, particularly in the context of small and medium-sized enterprises. Moreover, over the past 7 years, market conditions have changed, and new regulations have been adapted to these changes. 4. EMIR 3 regulation EMIR 3 introduces changes to the original regulation. The changes stem from a renewed need to increase the security of EU central counterparties (CCPs) to mitigate excessive reliance on systemically important CCPs from third countries. One of the most important changes is the requirement to maintain an active account with an authorized central counterparty within the European Union and to clear a representative number of interest rate derivatives transactions through this account in Polish złoty and euro. In addition to these regulations, EMIR 3 expands the scope of obligations regarding stress testing and reporting to the Polish Financial Supervision Authority. The primary goal of the amendment to the original EMIR is to increase the security and stability of the derivatives market by reinforcing oversight of these instruments. 4.1 Active Account Requirements Account activity requires that at least one EU-authorized account be active and that at least a representative number of transactions on the active account be settled. The Regulation specifies the necessary operational conditions for an active account to be functional, as documented in legal documentation, and to have IT connectivity. The counterparty must also have systems and resources that prevent it from operationally using the active account. All new transactions of the counterparty in derivative contracts falling within the automatic reconciliation category (AAR) can be settled in the account at any time. These operational conditions must, at a minimum, be stress-tested. Counterparties subject to AAR are required to report by calculating their activities and risk exposures in terms of the AAR. They must provide the competent authorities with the information necessary to assess compliance with the AAR every six months, including, where necessary, the representativeness obligation. Where appropriate, information contained in the report submitted pursuant to Article 10 of the Regulation must be used. 9 of EMIR, and also demonstrate in the report that the legal documentation, IT connectivity, and internal processes related to active accounts comply with the requirements. The regulations stipulate that counterparties subject to AAR that have already cleared at least 85% of their derivative contracts will be exempt from the operational conditions and aspects of the AAR reporting requirement. 4.2 The subjective scope of the active account requirement The requirement to have an active account applies to both financial and non-financial counterparties subject to the clearing obligation under EMIR and exceeding the thresholds in any AAR category. To determine whether an entity is subject to the AAR, it must first be subject to the clearing obligation under EMIR. Furthermore, the trading must involve OTC interest rate derivatives denominated in euro or Polish zloty, or involve short-term interest rate derivatives denominated in euro, and must exceed the clearing threshold of three billion euros individually or collectively for all types of transactions covered by the scope. Within six months of the regulation's entry into force, technical standards for active account requirements will be defined. The obligations stipulated in the regulation will apply to counterparties subject to the central clearing obligation that are clearing members from a third country and that exceed the clearing threshold in any instrument subject to the clearing obligation through an active account. 4.3 Transaction settlement rules Transaction clearing covers activities of derivatives counterparties within the meaning of EMIR, who are required to report the transaction to a repository (i.e., entities registered under EMIR, up to and including the transaction date for financial and non-financial counterparties, and up to the end of the second business day following the transaction's conclusion for non-financial counterparties whose trading activity in financial instruments does not exceed the regulatory thresholds). If transactions are concluded outside of a regulated market, they must be cleared at a CCP (central counterparty). Transactions cleared exclusively OTC must employ appropriate procedures to mitigate credit risk. Confirmation of the transaction must occur within the timeframe specified in EMIR. The 2024 Regulation amends the 2012 Regulation. referring to the third article regulating intragroup transactions, defining intragroup transactions as OTC derivative contracts entered into with another counterparty that is a member of the same group, if both counterparties are fully included in the same consolidation and are subject to appropriate centralised risk assessment, measurement and control procedures, and that counterparty is established in the European Union or another third country that is not a high-risk country. 4.4 Margin Requirements Counterparties should report all relevant types of collateral, providing values before and after reduction. The counterparty submits a report, determining the fixed value to be entered as the portfolio value. At the individual transaction level, initial margin and variation margin are posted for an uncleared derivative in accordance with the margin agreement. Compared to the original EMIR regulations, EMIR 3 increases the importance of transparency provisions for CCPs for participants providing clearing services and those providing such services to their clients. Central counterparties are required to disclose the performance of their margin to entities with whom they transact. This information should include margin model parameters such as the confidence level, the lookback period, the liquidation horizon, and the risk that encompasses the model's elements. Central counterparties also provide clearing members with a list of key assumptions and constraints of the margin model, including a description of the events that will trigger a breach of the assumptions. 4.5 Requirements for the recognition of third-country systems A new feature of EMIR regulations, introduced in its third regulation, is the exemption from the obligation to clear transactions with third-country pension systems. The systems must be recognized under the law of their country, authorized and supervised, provide pension services, and not pose a threat to the financial stability of the European Union. Referring to the previous provisions of EMIR 3, the obligation for transactions with third-country pension systems is for these participants to hold an active account. The exemption from transactions with third-country pension systems is intended to facilitate cross-border transactions.
Kieltyka Gladkowski KG Legal - August 21 2025
Press Releases

KWKR advised Digital Ocean Ventures Starter on its investment in 1Security

KWKR advised the Digital Ocean Ventures Starter fund on another investment transaction, this time in 1Security – a company developing a platform that secures Microsoft 365 collaboration environments in the context of implementing artificial intelligence tools. The funds raised will be allocated to the creation and commercialization of a platform designed to protect Microsoft 365 environments from the risk of data leaks during the deployment of AI solutions. The KWKR team provided comprehensive legal support, from due diligence, through drafting the agreement, to final negotiations. The KWKR team members involved in the transaction were: senior associate Paweł Machowski (corporate), associates Dominik Korybalski (corporate), Kamil Stengert (corporate), Anna Bartosiak (compliance), and Joanna Kik (TMT). 1Security addresses a critical challenge of the AI era – the permissions sprawl within Microsoft 365. The platform builds an intelligent security layer that provides a real-time permissions map, automatic access correction, and AI-powered detection of sensitive data. This solution protects organizations from excessive access of AI tools such as Copilot to sensitive corporate data. The firm cooperated with the company’s and founders’ legal advisors – LLW law firm and legal counsel Jędrzej Szymczyk. This transaction marks the second investment of the Digital Ocean Ventures Starter fund, following its earlier support for Flathub, the company behind the Gaius-Lex project (https://kwkr.pl/en/kwkr-advised-the-digital-ocean-ventures-starter-fund-on-its-first-investment-in-the-gaius-lex-project/). Both investments are in line with the fund’s strategy of supporting innovative Polish startups developing AI-driven solutions for various sectors of the economy. Bogdan Setlak Marketing specialist [email protected] +48 504 034 729
KWKR Konieczny Wierzbicki i Partnerzy - August 18 2025
Press Releases

KIELTYKA GLADKOWSKI KG LEGAL

KIELTYKA GLADKOWSKI KG LEGAL is representing a global provider of a core CFD trading platform from the Middle East before the Polish central cybersecurity authority in a procedure to block websites used by brokers in the international financial market, including the FOREX market. Our lawyers are tasked with presenting evidence that the online activity of professional brokers operating on stock markets using our global client's core platform complies with the latest regulations of the Polish Act on Combating Abuse in Electronic Communications and the Polish Act on the National Cybersecurity System. In case KIELTYKA GLADKOWSKI KG LEGAL is representing a global provider of core online trading platform for professional CFD derivatives brokers in a procedure for overseeing internet network security in Poland before the President of the Office of Electronic Communications in Warsaw and, separately, by the Computer Security Incident Response Team of the Scientific and Academic Research Institute of NASK, part of the CERT POLSKA division. Interestingly, the latest procedural law in Poland requires communication with Polish authorities exclusively via electronic means. Our lawyers have special professional accounts for handling such correspondence as part of their admission to the bar association. The Polish authority, operating within the European cybersecurity network, wrongly applies preventive measures to our client's online global activity, including professional software facilitating trading in financial instruments worldwide. The basis of our activities are regulations of Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code (Recast) as well as Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union (NIS 1) and NIS 2 (Directive (EU) 2022/2555).
Kieltyka Gladkowski KG Legal - August 13 2025
Press Releases

KWKR advised the Digital Ocean Ventures Starter fund on its first investment in the Gaius-Lex project

The KWKR team advised DOV Starter (Digital Ocean Ventures Starter) on its first investment, supported by the European Funds for a Modern Economy (FENG), in Flathub sp. z o.o. – the company behind Gaius-LEX, an AI-powered legal assistant designed to support lawyers and law firms.   The total transaction value amounted to approx. PLN 1.85 million. The round also included a co-investment by business angel Vladyslav Muzhylivskyi, PhD. The funds will be used to support the further development of Gaius-LEX in both Poland and international markets.   KWKR provided comprehensive legal support to the fund at every stage of the transaction – from legal due diligence through the preparation and negotiation of investment documentation to transaction closing. The project required close cooperation with the DOV investment team, the company’s founders, and legal counsel representing Flathub. It also involved collaboration across various internal teams at KWKR and an in-depth understanding of the legaltech sector and AI-related regulations in the legal industry.   The KWKR team involved in the transaction included experts from the corporate practice: partner Paulina Opiełka, senior associate Paweł Machowski, associates Katarzyna Mikosz, Dominik Korybalski, and Kamil Stengert, as well as junior associates Sandra Murdzek and Maciej Ziemiański (all from the corporate team). The project was also supported by associate Anna Bartosiak (compliance), associate Joanna Kik (TMT), and intern Milena Taciuch from the corporate law team.   The founders and Flathub were advised by the law firm The Heart Legal.   This transaction marks the first investment by the DOV Starter fund and reflects the global trend of increasing investment in AI-based legal solutions. According to publicly available forecasts, the legal AI market is expected to grow from USD 1.4 billion to USD 3.9 billion by 2030.   What sets Gaius-Lex apart in the legaltech space is its use of lightweight, local sLLM models instead of large cloud-based language models. These models can be run directly on the client’s infrastructure, significantly enhancing data security by eliminating the need to send sensitive legal information to external systems.   Bogdan Setlak Marketing specialist [email protected] +48 504 034 729  
KWKR Konieczny Wierzbicki i Partnerzy - August 4 2025