EMIR Implementing Act and Act introducing Book VII of the Code of Economic Law published today
28/05/2014
Today, the Belgian Act of 25 April 2014 amending various financial legislation in view of Regulation 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (the “EMIR Implementing Act”) and the Act of 19 April 2014 on the introduction of Book VII “Payment Services and Credit” Code of Economic Law (the “Act introducing Book VII of the Code of Economic Law”) were published in the Belgian Official Journal.
EMIR contains new EU regulations with respect to Over the Counter (OTC) derivatives. The purpose of EMIR is to improve transparency and reduce the risks associated with the (OTC-) derivatives market. As a result of EMIR, OTC derivatives contracts will either have to be centrally cleared through central counterparties (“CCPs”) or will be subject to risk mitigation measures to be taken by the relevant counterparties. Details of every derivative transaction will have to be reported to a so- called trade repository. A trade repository is an entity that will centrally collect the reports of derivative transactions in a transaction register. It is expected that the trade repositories will provide regulators and supervisors with a better view of the (OTC-) derivatives market.
Whereas the provisions of EMIR are directly applicable in all EU member states, without having to be implemented into national legislation, the EMIR Implementing Act adapts the current Belgian regulatory and supervisory framework to EMIR’s provisions. In addition to (technical) amendments throughout various financial laws, the EMIR Implementing Act applies the Belgian “Twin Peaks” supervisory architecture to the financial sector and also to OTC derivatives, central counterparties, and trade repositories.
The EMIR Implementing Act designates the National Bank of Belgium (the “NBB”) as the competent authority for the authorisation and prudential oversight of CCPs established in Belgium (including, but not limited to, most organisational requirements, fit & proper character of management, requirements in respect of qualified holdings in CCPs, exposure management, margin requirements, liquidity risk management, collateral requirements, ...). The detection of systemic risks and the supervision of clearing, reporting, and risk mitigation requirements under Title II of EMIR are also within the remit of the NBB.