The European Commission have just agreed to extend pension schemes’ exemption from centrally clearing over the counter derivatives under the European Markets and Infrastructure Regulation (EMIR), until 2017. Following the agreement, pension schemes that aren’t ready by the expiry of the clearing exemption will have some explaining to do.
The extension was announced on August 15. The Commission pointed out that schemes need to move along ahead of deadline and that three years is more than a sufficient amount of time.
Trustees now have a legal obligation to ensure timely confirmation, position reconciling, dispute resolution procedures, portfolio compression and reporting.
One very challenging area is current legislation that allows only for cash variation margin to be posted for derivatives. So far, Consultancy Europe Economics has been researching alternative systems for the EC, coming up with seven possible solutions.