European Derivatives Legislation Effective 16 August 2012

Almost two years after draft legislation on over-the-counter ("OTC") derivatives was proposed by the European Commission and following extensive discussions during the trilogue negotiations between the European bodies, the European Market Infrastructure Regulation ("EMIR")  will come into force on 16 August 2012.  As an EU regulation, it has direct effect in EU member states and no national measures are required to implement its requirements.

However, there are a significant number of implementing measures required under EMIR before all of its key requirements become fully operative.  Given the extent of the implications for asset managers who use derivatives in their portfolios, parties to OTC derivatives contracts should begin to consider those implications now to assess what changes may be required to their business models.