PWC All Clear Eu Introduces Clearing and Reporting Regime for Otc Derivatives

7/29/2019 PWC All Clear Eu Introduces Clearing and Reporting Regime for Otc Derivatives

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EMIR

May 2012

All clear?

EU introducesclearing and

reporting regime forOTC derivatives

www.pwc.co.uk


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2 EU introduces clearing and reporting regime for OTC derivatives2 Securing your access | OTC derivatives and central clearing


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PwC 3

Contents

Executive summary 4

EMIR introducing an EU regime for OTC derivative trading 6

International mandate for reform of OTC derivatives market 6

EMIR requirements 7

Overlap with US Dodd-Frank Act 7

Who is subject to EMIR? 7

Requirements for cleared contracts 8

Bilateral trading and cleared trading comparison 8

Risk management requirements for uncleared contracts 9

Reporting obligations 9

Coordination with other legislative initiatives 9

Third country issues 9

Key issues for rms 10

How we can help 11

Contacts 12


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4 EU introduces clearing and reporting regime for OTC derivatives

While the text of EMIR is near-nal at thisstage, regulators still need to producetwenty-ve sets of regulatory technicalstandards (RTS) dening some of the key

requirements and their effective dates.Notably, RTS will clarify which OTCderivative contracts are subject to mandatory

central clearing, dene the reportingrequirements and establish margin andcollateral standards for CCPs.

Impacts for rmsThe EMIR rules are designed to increasemarket stability and to reduce marketinterdependencies. Long-term the newregime will substantially reducecounterparty risks for rms dealing in OTCderivatives, improve trade processingefciency, and reduce the risk of contagionfor both market participants and markets

themselves. It will also lead to morestandardisation of OTC derivative contractsand tighter spreads on transactions.

However, rms also need to anticipate someeffects of EMIR which may be challenging:

Whats changing in EUderivatives marketsThe EU is near completing rules which willrestructure post-trade operations for over thecounter (OTC) derivatives in less than a year,through a regulation focusing on OTC

derivative transactions, centralcounterparties (CCPs) and trade repositories(TRs), known as the European MarketInfrastructure Regulation (EMIR). TheEuropean Union (EU), along with the otherG20 countries, committed to reform the OTCderivatives market by 2012, and thiscommitment is driving the EUs tighttimetable for implementation.

The EMIR rules will require rms to reportall derivative contracts to TRs, to cleareligible OTC derivative contracts throughCCPs and to apply risk management

standards for uncleared trades. It will alsoestablish new authorisation and regulatoryschemes for CCPs and TRs.

Executive summary

On 29 March 2012 the European Parliament(Parliament) approved the EMIR text, pavingthe way for its passage by the EuropeanCouncil of Finance Ministers (Council) thisspring. We expect the reportingrequirements to become effective by early2013 and for clearing requirements to be

phased in from spring 2013.

The version passed by the Council containedfew signicant changes from prior versions,

except that the clearing requirement wasexpanded to include certain OTC derivativetrades conducted between counterpartieslocated outside of the EU. The requirement isstated in extremely broad terms and theEuropean Securities and Markets Authority(ESMA) is required to develop meaningfulcriteria to rene it.

4 Securing your access | OTC derivatives and central clearing


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The OTC derivatives market will evolveinto a two-tier market for centrallycleared and bilaterally cleared trades.

Firms will face increased costs fromclearing fees and additional reportingrequirements.

Both clearing brokers and trading rmswill need to make operational changes toensure compliance with the newregulations.

Firms are also likely to face higher capitalcharges and will need to post margin incash or other designated eligiblesecurities, in relation to contracts whichare not continually cleared.

The narrowing of eligible collateralrequirements may result in a shortage ofsuch assets, giving rise to a growth incollateral trading and related services.

The demand for clearing services over thenext twelve months may exceed supplyand operational capability of CCPs to onboard clients, with the result that centralclearing may not be immediately availableto all those entities captured by the scopeof EMIR.

In the short-term, trade volumes maydecrease while market participants assessthe costs of hedging risks, the challengesof matching risks to standardisedproducts and the overall costs of OTCderivative maintaining OTCderivatives positions.

How we can helpPwC have the expertise and knowledge to help you ensure that your rm is

operationally ready to meet the new clearing and reporting requirementsand collateral management challenges. In addition, EMIR is part of apackage of EU legislative reforms affecting capital markets activities. Theintroduction of a European OTC derivative clearing infrastructure and itsoperational rules, taken together with the other EU and US capital marketreform, requires a strategic response from market participants.

We are working with rms to help them understand the overlaps between

EMIR and other capital market reform measures. We can help you todevelop strategic approaches to take advantage of the opportunities offeredby market restructuring as well as adapting to these changes in an efcientand cost effective way.

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EMIR introducingan EU regime for OTCderivative tradingThe EU is close to achieving the rst majormilestone in imposing mandatory clearingand reporting requirements for OTCderivatives contacts, in time to meet theDecember 2012 deadline set by the G20 in2009.

The rules are embodied in EMIR, which wasadopted by the European Parliament on 29thMarch 2012. After the Council adopts it atan upcoming meeting, the legal frameworkwill be largely in place. EMIR will come intoforce 20 days after publication in the EUsOfcial Journal.

However, EU regulators are still working onmany of the RTS which underpin EMIR, soquestions remain around when the newregime will actually go live. We expect thereporting requirements to become effectiveby early 2013 and for clearing requirementsto be phased in from spring 2013. Thistimetable may give the industry a fewmonths breathing room, but it hasimplications from a practical perspectivebecause important uncertainties still remain.

EMIRs clearing requirements will impact allOTC derivative contracts traded in the EU,

and certain contracts traded in thirdcountries. Firms will need to fundamentallyrestructure their OTC derivative tradingoperations, by either transferringcounterparty risk management to CCPs oradapting to increased capital and collateralrequirements and enhanced riskmanagement standards for bilateral trades.

New reporting requirements for allderivative contracts will give regulators, andeventually the market, access to improveddata relating to derivative trading across the

would be traded on-exchange or throughelectronic trading platforms, cleared throughCCPs (or subject to appropriate credit riskmanagement rules) and reported to TRs.

G20 countries are making progress inachieving four basic OTC derivative reformobjectives:

mitigating credit counterparty risk

reducing operational risk

increasing transparency

enhancing market integrity.

In the United States (US), the Dodd-FrankWall Street Reform and Consumer ProtectionAct (Dodd-Frank Act) introduced OTCderivative clearing requirements which, likeEMIR, apply to non-nancial rms as well as

to regulated nancial rms. For the EU,EMIR creates the clearing and basicreporting infrastructure. The EU plans tointroduce exchange trading requirementsand market disclosure requirements forderivatives through revisions to the Marketsin Financial Instruments Directive (MiFID),which are currently being negotiatedin Brussels.

EU. The enhanced transparency is expectedto help regulators better spot threats tonancial stability that may arise from

derivatives trading.

The new rules also create the marketinfrastructure to support this regime byintroducing common authorisation andoperational requirements for CCPs andregistration and supervision requirementsfor TRs by European regulations.

International mandatefor reform of OTCderivatives marketsIn 2008 Bear Sterns near-collapse, LehmanBrothers failure and the AIG bail-out

revealed signicant weaknesses in thestructure of OTC derivatives markets.Because the bulk of OTC derivatives tradingcurrently takes place off-exchange, directlybetween individual market participants,regulators and other market participantshave very little transparency as to the natureand volumes of trading.

Further, the current structure of the OTCderivative market creates complexinterdependencies between marketparticipants, which exacerbates the spread ofcontagion when rms get into trouble. In the

nancial crisis, poor counterparty riskmanagement led to inadequatecollateralisation and catastrophic losses.Lack of contract standardisation and poorback ofce operations resulted in trade

processes backlogs taking years to resolve.Off-exchange contract negotiations impededprice formation and left regulators and riskmanagers without adequate marketinformation.

In September 2009 the G20 leaders agreedthat by no later than December 2012 OTCderivative contracts in all G20 markets

Council approves

EMIR text

May 2012

ESAs deliver Level 2 RTS

consultations

June 2012

ESMA and ESAs complete

RTS by

30 September 2012

EMIR published in Ofcial

Journal, effective 20 days afterpublication

July 2012

RTS approved, effective

20 days after publication

in Ofcial Journal

March 2013

Key EMIR implementation dates


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EMIR requirementsEMIR sets out the following requirements inrelation to OTC derivative trading:

clearing obligation for eligible OTC derivative tradesreporting obligation for allderivative tradesmeasures to reduce counterparty creditrisk and operational risk for OTCderivative trades which arebilaterally tradedrules for the authorisation and operationof CCPsrules on the interoperabilitybetween CCPSrules for the registration and operationof TRs.

The new rules will improve market stabilityby replacing individual market participantscounterparty risk management processeswith standardised CCP requirements. Mostimportantly, EMIR will interpose the CCPbetween counterparties thus reducingpotential credit default contagion betweenrms and markets.

The new reporting requirements will applyto all derivative trades and aim to ensure thatregulators can monitor the build-up ofsystemic risk through excessive riskconcentrations. Risk concentration within

the CCPs themselves will be addressedthrough strict requirements covering issuessuch as governance, capital requirementsand default funding mechanisms.

EMIR requirements apply to trading inderivative contracts, as dened withinMiFID. The EMIR mandatory clearing andreporting requirements set the scene for thenew exchange-trading and pre-and post-trade transparency requirements that willapply under proposed revisions to MiFID(MiFID II). The EU is also amending itsmarket abuse regime to cover trading in OTC

derivatives and to seek to bring moreintegrity to OTC derivative trading practicesand conduct of business.

Overlap with US Dodd-Frank ActBoth the Dodd-Frank Act and EMIR containwide ranging extraterritorial requirementswhich capture OTC derivative tradingactivities conducted in third countries.Firms transformation programmes mustanticipate the reach of both sets of rules.

There are many similarities between the tworegimes rules: both set out clearingrequirements, CCP authorisation andregulatory regimes, margin and segregationrules and rules for reporting and traderepositories.

However, the Dodd-Frank Act rules on OTCderivatives go further, capturing non-nancial rms in the scope of authorisationrequirements, imposing new conduct of

business rules on dealers, creating positionlimits and position management rights, andmandating exchange trading. Further, thecontroversial Volker rule under the Dodd-Frank Act contains a swap push out rulewhich requires the legal separation of swaptrading operations from certain other rm

activities. Thus far, the EU has not sought torequire legal seperation of derivative tradingactivites.

Who is subject to EMIR?EMIR rules apply to CCPs and their clearing

members, nancial counterparties, certainnon-nancial counterparties and TRs.

Not all market participants will have tocomply with EMIR there are fourexemptions from the mandatory clearingrequirement:

Contracts below a clearing threshold ESMA will determine thresholds belowwhich derivative contracts entered into bynon-nancial rms will not be subject tothe clearing requirement. Exempt tradeswill still have to be reported to TRs bynancial institutions facilitating such

transactions.Financial institutions involved inmanaging public debt Central banks,public bodies responsible for orintervening in the management of publicdebt and the Bank for InternationalSettlements are exempt from centralclearing and reporting obligations.

Intra-group transactions Groups ofnancial rms, groups of non-nancialrms, and rms combining nancial andnon-nancial rms may be eligible for anexemption. This exemption requires full

consolidation of the group and centralisedrisk management processes andsupervisory pre-approval. Furtherguidance on how this exemption willwork in practice will be provided in theRTS from ESMA.

Pension funds EU policy makersrecognise that pension scheme operatorsminimise their cash positions to maximiselong-term returns for policy holderreturns (i.e. they seek to be asset rich,cash poor). Until industry can develop anon-cash collateral alternative, EMIR willexempt pension scheme operators fromclearing requirements for three years.

However pension scheme operators willstill be subject to reporting requirementsand collateralisation requirements. Other

similar schemes such as those generatingretirement income or schemes operatedby life insurance companies may alsoqualify for this exemption if certainconditions are met.

Who is a nancialcounterparty under

EMIR?

This term is dened

widely under EMIR toinclude MiFID investmentrms, credit institutions,

non-life insurers, lifeassurance rms,reinsurers, undertakingsfor collective investmentsin transferable securities

(UCITS) and theirmanagers, occupationalpension schemes (IORPs)

and alternativeinvestment fundmanagers (AIFMs).


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Requirements forclearing contractsEMIR establishes a bottom-up and top-down approach. National supervisors willauthorise CCPs to clear certain types ofderivatives and to inform ESMA of these

authorisations. Then ESMA will considerwhether mandatory clearing should apply tothat class of derivative across the EU.Separately, ESMA can decide to mandatecentral clearing for certain classes ofderivatives across the EU, and invite CCPs totender for the right to clear those types ofderivatives. However, in the short-term, weexpect to see the market infrastructure growprimarily from the bottom-up, while ESMAbuilds up its capabilities and knowledge inthis area.

EMIR sets out preliminary criteria forclearing eligibility, including: tradingvolumes, whether contracts are alreadycleared by a CCP, the ability of CCPs tohandle anticipated volumes and any specialrisks which may be created by centrallyclearing such contracts. ESMA will elaboratefurther on these criteria in RTS, setting outthe basis on which it will make suchassessments going forward.

Foreign exchange swaps and forwards poseparticular challenges under EMIR.Legislators rejected proposals to exempt FXderivatives from the scope of EMIR.However, EMIR recognises that derivativesexposed primarily to settlement risk, as inthe case of FX derivatives, may not be

suitable for the same treatment as thoseexposed primarily to counterparty risk.ESMA will make the nal determination, butEMIR states that the regime for suchcontracts should rely notably on preliminaryinternational convergence and mutualrecognition of the relevant infrastructure.

As a rst step, rms will need to prepare a

clearing plan for all OTC derivative contractsthey trade which are likely to be deemedclearing eligible. Firms will need to assessthe costs and operational and commercialconsiderations of becoming a CCP clearingmember or becoming a client of another CCPmember rm.

Then rms will be able to assess how thecollateral requirements of their CCP orclearing rm differ from the current OTC

collateral requirements that they operate, for

example to comply with InternationalDerivatives and Swaps Association (ISDA)master agreements which are widely used bymost derivative counterparties.

Under CCP clearing, rms will have theoption to maintain omnibus or individualclient segregated accounts, against which

collateral will be posted. Margin calls will bemade intra-day, at least when pre-denedthresholds are exceeded. Legislators andcommentators have ercely debated the typeof collateral required for CCP initial marginand variation margin. Table 1 belowcompares bilateral and cleared tradingarrangements.

Some stakeholders are concerned that newcollateral requirements will be expensiveand difcult to meet. In particular, there is arisk that OTC dealing rms may seek

alternative and unregulated trading and

hedging techniques, to avoid CCPrequirements that they deem too expensiveor difcult to full.

Table 1: Bilateral trading and cleared trading compared

Bilateral transactions Cleared transactions

Counterparty risk lies with each trading partner

Margin requirements based on individual valuation methodsand varying ISDA Master Agreement/collateral supportagreements

Margin is held by counterparty or third party custodian

Trade execution remains bilateral; but once a trade is agreed, it isnovated to the CCP

The CCP intermediates the trade, replacing the bilateral contractbetween the counterparties with two contracts: one betweeneach counterparty and the CCP

The CCP has standard non-variable margin requirements andrules based on the CCPs margin model

Initial and variation margin are posted with the CCP at certaincollateral locations

Buy-side rms are not expected to become direct clearing

members of CCPs, instead access will be established via adesignated clearing member or clearing broker


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Risk managementrequirements foruncleared contractsEMIR requires counterparties to holdadditional capital to manage risks which arenot covered by an appropriate exchange ofcollateral. The joint discussion paper issuedon 6 March 2012 by the ESAs suggests thatrms subject to the Capital Requirements

Directive (CRD) (i.e. banks and investmentrms) or insurance companies subject toSolvency II are deemed to be sufcientlycapitalised to cover the risks associated withOTC derivatives trading and that noadditional capital requirements should beimposed on these rms. However, the ESAsindicated that rms subject to the UCITS

directive or the Alternative Investment FundManagers Directive (AIFMD) are notadequately capitalised to cover the risks ofuncleared trades through postingappropriate collateral. UCITS and AIFMD donot provide a legal basis on which the ESAs

could prescribe additional capitalrequirements for those types of rms.

If ESMA deems a type of derivative to beinsufciently liquid or not sufciently

standardised to be centrally cleared, inaddition to capital and collateralrequirements it will impose enhanced riskmanagement procedures to those types ofcontracts:

trade conrmation requirements

reconciliation requirements

daily mark-to-market or mark-to-modelvaluation

collateral segregation requirementsreporting requirements.

We will see further details on theconrmation, reconciliation procedures,

procedures relating to intra-groupexemptions and criteria for reporting thirdcountry trading activities as the RTS emerge.

Reporting obligationsFirms and CCPs are required to report allOTC derivative contact transactions to a TR(or ESMA in the absence of TRarrangements) no later than one working

day following the conclusion, modication ortermination of the contract. Thisrequirement will apply to all existingon-exchange derivatives trading as well asall cleared and uncleared OTC dealing. Firmsmust keep records of trades for ve years

from the date of the termination of thecontract. ESMA will develop data andformat requirements through RTS.

Coordination withother legislative

initiativesReform of OTC trading practices in the EU isclosely linked to other nancial marketreforms. On the European front many otherregulatory initiatives to improve nancialmarket infrastructures are alreadyunderway, including the recent European

Commission proposal in relation to centralsecurities depositories, the European CentralBanks Target2Securities initiative, and theSEPA regime for payments. These initiativesseek to improve clearing and settlementsystems resiliency and efciency.

From a trading perspective, EMIR is closelylinked to the proposed MiFID II and theMarket Abuse Directive revisions which willrequire many OTC derivatives to be traded

onexchange and will bring trading in theseinstruments into the scope of the EU marketabuse regime. We are also awaitingproposals from the European Commission toamend the Securities Law Directive toaddress investor rights and safekeepingissues.

Developing deep regulatory reforms likeEMIR poses signicant challenges

maintaining coherence and consistency withthe reforms mentioned above and the widerprudential reform agenda, including CRD IVand Solvency II is essential, and further workon EMIR may be required to ensure we

achieve that.

These factors reinforce the complexity of thecurrent regulatory environment and theneed for rms to assess regulatory change asa package of reforms, not as isolated sets ofrequirements.

Third country issuesEU rms carrying out OTC derivatives tradeswith counterparties in non-EU countries (i.e.third countries) will have to comply withclearing requirements. Further, OTCderivative transactions carried out betweentwo or more counterparties in third countrieswill be subject to EMIR clearingrequirements if the trades have a direct,substantial and foreseeable effect within theUnion or where it is deemed necessary orappropriate to prevent evasion of anyprovision of EMIR.

It is still unclear exactly which OTCderivative trading activities will be capturedby these broad requirements. The EuropeanCommission will also need to undertakethird country equivalence assessments withregards to CCPs located outside of the EU.

All of these standards will be addressed inRTS and will be critical requirements forrms which conduct cross-border business

outside of the EU.

Convergence of internal clearing andreporting standards will be critical to thelong-term success of the internationalclearing regimes introduced under the G20mandate. The benets that regulators

anticipate obtaining through greaterstandardisation, such as increased tradingvolumes, will be limited unless CCPs are ableto cross-clear and net positions. Also,

establishing a universal standard for TRreporting is essential for regulators to view arms aggregate trading activity.


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Key issues for rmsThe Parliaments passage of EMIR on 29March 2012 has cleared the way for nalCouncil vote and EMIR will come into force

20 days after it is published in the OfcialJournal. Although the implementation date

of the regulation is pending, because of thevery tight deadlines rms will need toproceed with preparations before the rstdraft RTS are published in summer 2012 andseparately come into force. Firms mustmanage many legislative and commercialuncertainties as they develop strategic andoperational programme plans:

Implementation requirements not yetreleased to the market. Regulators stillneed to produce twenty-ve sets of RTS

dening some of the key requirements(see Table 2 for full list of expected RTS).Notably, technical standards will clarifywhich OTC derivative contracts aresubject to mandatory central clearing.

Complexity around third country issues.The European Commission will identifycritical details on third countryapplication and equivalence standards.This aspect will be particularly importantto understand the implications forglobal rms.

Multiple pricing outcomes. Firms will

need to anticipate which derivativestransactions will be bilateral or centrallycleared. For business which remainsuncleared, rms must anticipate the newcapital, collateral and costs associatedwith the additional risk managementprocesses. For cleared business, rms

must assess the choice of various CCPs orclearing brokers and the marginrequirements and pricing options

EMIRs passage and implementation dateswill arrive quickly during the next year.Firms which have not already developedreporting and clearing strategies, budgets, IT

and resourcing plans must do so as a matterof urgency. We advise rms to monitor thenal stages of the legislative process anddraft their project plans around therequirements in late stage proposals, but beprepared to accommodate any late legislativechanges.

presented by each option. Clearingbrokers need to consider how to setmargin requirements to ensure that theyare consistent with those of different

CCPs and incorporate those costs in theircommercial clearing rates.

Transition to standardised collateralrequirements. In addition, RTS willspecify the types of assets which meetCCP initial and variation marginrequirements. These requirements areexpected to have a dramatic effect onrms collateral funding abilities, and in

turn could also impact other commercialactivities, such as securities lending.Further, the standardisation of collateralrequirements and loss of re-hypothecationopportunities may result in a shortage ofhigh quality collateral.

Application of intra-group exemptions.RTS will also clarify how intragroupexemptions within groups of nancialand non-nancial rms will apply. Those

exemptions will not be automatic, theywill require pre-approval by regulators.

Establishment of reporting arrangements.New reporting requirements will apply toall derivative transactions includingthose which remain bilaterally traded.This requirement will put more demandson rms data management and reporting

systems, particularly on client on-boarding and data capture processes.

How we can helpWe have extensive experience assisting clients with clearing and collateral managementactivities:

developing a client clearing strategy

designing business and operational clearing processes

building collateral management business and technical IT architecture

advising on a collateral optimisation strategies and implementation approaches

designing, implementing and testing regulatory and transaction reporting systems

providing assurance over controls for client services, such as prime brokerage andclearing services.

Given the short time frames, time is of the essence. We have multi-disciplinary teams ofexperts who can help you assess and respond to the many compliance, technology and

operations challenges presented by EMIR and other derivatives reform rules which arefundamentally reshaping the international capital markets.


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Table 2: List of RTS that ESMA has to submit to the European Commissionby 30 September 2012

1 Criteria for transactions conducted by counterparties outside the EU which are subject toEMIR clearing requirements, types of indirect contractual arrangements that do not increasecounterparty risk and ensure adequate protection

2 Details in notications from competent authorities about OTC derivative contracts approvedfor clearing

3 Classes of OTC derivatives to be cleared on EU-wide basis and date(s) from which clearingobligation takes effect

4 Details to be included in public register

5 Notion of liquidity fragmentation

6 Details of trade reports

7 Format and frequency of reports, dates for commencement of reporting

8 Criteria for which derivative contracts qualify as hedge contracts, value of clearing thresholdsfor intra-group transactions that trigger clearing requirements

9 (European Securities Authorities) Procedures for approving counterparty risk management,

including mark to market techniques, intra-group exemption notice informationrequirements, contracts considered to have a direct, substantial, foreseeable effect within theUnion or cases where it is necessary or appropriate to prevent the evasion of any provision ofEMIR

10 (European Banking Authority) Risk management procedures, including levels and types ofcollateral and segregation arrangements, level of capital required for compliance, proceduresfor counterparties when applying for exemptions, and criteria for what is prompt legal transferof own funds

11 (European Banking Authority) Rules regarding capital and retained earnings and reserves ofa CCP

12 Conditions under which Union currencies are relevant to assessment of which central banksshould be included in EMIR colleges

13 CCP information that applicant 3rd country CCP shall provide ESMA in application

14 CCP minimum contents of corporate governance arrangements

15 CCP record keeping requirements

16 CCP BCP and disaster recovery plans

17 CCP appropriate percentage and time horizons for the liquidation period and the calculationof historical volatility to be considered for different classes of instruments

18 CCP framework market conditions to be used to dene size of default fund and other nancialresources

19 CCP liquidity fund framework

20 CCP methodology for calculating and maintaining CCP own resource to be used

21 CCP highly liquid collateral standards, haircuts and conditions under which commercial bankguarantees may be accepted as collateral

22 CCP highly liquid nancial instruments, highly secured arrangements andcondensation limits

23 CCP stress testing requirements

24 TR application standards

25 TR frequency and content of data to be shared among regulators to aggregate andcompare data

The ESAs are tasked with drafting some 25 RTS and must submit these to the Commission by30 September 2012. The European Commission has up to three months to endorse the RTS,and then the Council and European Parliament have a further three months to review thenalised versions. Thus, the nal RTS may be in place by March 2013.


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This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information containedin this publication without obtaining specic professional advice. No representation or warranty (express or implied) is given as to the accuracy, or completeness of the informationcontained in this publication and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability,responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decisionbased on it.

2012 PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom),which is a member rm of PricewaterhouseCoopers International Limited, each member rm of which is a separate legal entity.

ML1-2012-04-19-18 03-MF

www.pwc.co.uk

Contacts

Crispian [email protected]+44 (0) 20 7804 8148

Laura [email protected]+44 (0) 20 7721 1579

Justin [email protected]

+44 (0) 20 7213 8246

Mathew [email protected]+44 (0) 20 7213 4048

James [email protected]+44 (0) 20 7804 2327

Cedric [email protected]

+44 (0) 20 7212 3089

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PWC All Clear Eu Introduces Clearing and Reporting Regime for Otc Derivatives