EMIR: Revisit Of FX Collateral Requirements

On 18 December 2017, the European Supervisory Authorities (EBA, EIOPA, ESMA – "ESAs") published draft Regulatory Technical Standards (RTS) amending the framework of the European Market Infrastructure Regulation (EMIR) with regard to the requirement to exchange variation margin for physically settled foreign exchange forward contracts ("FX Forwards"). More specifically, the amendment of the current RTS and their subsequent implementation would entail the application of the requirement to exchange variation margin for physically settled FX Forwards only to transactions between institutions, as defined in CRD IV Regulation (i.e. credit institutions and investment firms). As a result, investment funds, which are currently in scope of the variation margin requirements, would be exempt from providing variation margin for FX Forwards.