The technical standards for OTC interest rate swaps clearing have been included in the Official Journal, giving the buy-side a year to prepare for the new rules.
The new rules were sworn in on 1 December, meaning clearing firms will have to comply from 21 June and asset managers will be subject to the new requirements from December 2017.
From that date, mandatory clearing will apply to asset managers with outstanding gross notional amount of non-centrally cleared derivatives above EUR 8 billion
The rules will apply to plain vanilla interest rate derivatives, float-to-float swaps - known as basis swaps, forward rate agreements and overnight index swaps.
Interest rate swaps make up around 80% of all global derivatives and the estimated daily turnover in the EU of OTC interest rate derivative contracts denominated in G4 currencies was over €1.5 trillion as of April 2013.
The new regulations stem from the G20 summit in Pittsburgh 2009, but have taken much longer than planned to come to fruition.
The US rolled its own central clearing rules out in 2013, while the European Securities and Markets Authority has been fine-tuning its own regulations and going back and forward with the European Commission.
The announcement from the European Securities and Markets Authority has set in motion a countdown for Europe’s asset managers to prepare for the new rules