«Implications of Regulation 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) in selected CEE/SEE countries ...»
National implementation laws and regulations EMIR, the Delegated Regulations and the Implementing Regulations (“EMIR Regulations”) are directly applicable in Austria. The Austrian Law on Central Counterparties (Zentrale Gegenparteien-Vollzugsgesetz – “ZGVG”), which entered into force on 14 November 2012, executes and manages the EMIR Regulations. In addition to the ZGVG, EMIR also triggered amendments to other existing Austrian regulatory legislation, including the Financial Market Supervising Authority Act (Finanzmarktaufsichtsbehördengesetz – “FMAG”) and the Finality Act (Finalitätsgesetz – “FinalG”).
Competent national authority’s measures to control central counterparties
According to article 3 ZGVG, the FMA is entitled at any time to:
1. review and request copies of books, documents and data-media of the central counterparty;
2. request information from central counterparties and their representatives and to summon and question persons according to the administrative procedure laws;
3. execute on-the-spot audits through auditors, auditor firms or other experts;
4. request the Austrian National Bank (“OENB”) to audit central counterparties;
OENB’s competence for on-the-spot audits over central counterparties comprehensively covers all business segments and risk types; OENB is obliged to take measures, including having sufficient personnel and organisational resources, to execute the audits; FMA is authorized to let its own personnel participate in the OENB’s audits;
5. request central counterparties to provide the FMA with existing records of telephone calls and data transfers;
6. request the central counterparties’ auditors to provide information to the FMA;
7. report to the public prosecutor’s office or a security authority, if the FMA suspects the commission of a criminal offence under Section 78 of the Austrian Criminal Procedure Code.
National rules on penalties applicable to violations of EMIR and national law provisions If a financial counterparty, non-financial counterparty or a central counterparty does not comply with the provisions of EMIR or ZGVG, after conducting an administrative penal proceeding, the FMA will punish such company’s representatives personally (Section 9 Austrian Administrative Penal Proceedings Law (“VStG”)), with a fine in the amount of up to EUR 150.000,00 (Section 6 ZGVG). In addition, the FMA is allowed to, and, for violation of rules under Articles 4,5,7,8,9,10 and 11 EMIR, is obliged to make public the company’s violation of the EMIR / ZGVG rules. In such cases the publication could only be prevented if it seriously jeopardises the financial markets or causes disproportionate damage to the parties involved.
Derivative trades on the following regulated markets do not fall under EMIR • Wiener Boerse AG Amtlicher Handel (Official Market) • Wiener Boerse AG Geregelter Freiverkehr (Second Regulated Market) TITEL
BULGARIACompetent national authority responsible for the supervision and execution of EMIR In Bulgaria, the supervision over financial and non-financial counterparties is within the competence of the Bulgarian Financial Supervision Commission (“FSC”) (Комисия за Финансов Надзор – “КФН”) which ensures compliance of their activity with EMIR.
National implementation laws and regulations EMIR, the Delegated Regulations and the Implementing Regulations (“EMIR Regulations”) are directly applicable across the European Union and do not require Bulgaria as a Member State to pass further implementing legislation. Therefore, no specific legal act has been introduced in Bulgaria to transpose EMIR. The only local legislative changes resulting from the EMIR Regulations were those implemented with regard to the administrative control over EMIR compliance. Those were amendments as of December 2013 to the Financial Supervision Commission Act, (“FSCA”), promulgated in the State Gazette, vol. 8/28 January 2003, (Закон за Комисията за Финансов Надзор – “ЗКФН”), and the Market in Financial Instruments Act (“MiFIA”), promulgated in the State Gazette, vol. 52/29 June 2007, effective as of 1 November 2007 (Закон за Пазарите на Финансови Инструменти – “ЗПФИ”).
Competent national authority’s measures to control central counterparties Bulgarian law does not permit specific local measures with regard to the control over the activities of central counterparties. Though this has been discussed for more than a decade now among the market participants and certain draft bills have been proposed by the FSC, Bulgaria is still lacking regulation on clearing houses. Local financial and non-financial counterparties must use central counterparties authorised to offer services and activities in the European Union.
National rules on penalties applicable to violations of EMIR and national law provisions For breach of Title II of EMIR, i.e., “Clearing, Reporting and Risk Mitigation of OTC Derivatives”, the Bulgarian Financial Supervision Commission may sanction the individuals committing the violations by fines in the range of BGN 5,000 (approximately EUR 2,500) to BGN 20,000 (approximately EUR 10,000) and with double sanctions for repeated breach.
The Market in Financial Instruments Act (ЗПФИ) further envisages that breaches by legal entities and sole entrepreneurs are to be sanctioned by fines in the range of BGN 10,000 (approximately EUR 5,000) to BGN 40,000 (approximately EUR 20,000) and by double sanctions for repeated breach. Pursuant to the FSCA (ЗКФН) the members of the FSC are entitled to access the office premises and the information systems of financial and non-financial counterparties and to request explanations in writing, documents and other data from any financial and non-financial counterparties, for which indications exist that they are violating EMIR. The FSC has the authority to issue administrative acts for violations of EMIR.
Derivative trades on the following regulated markets do not fall under EMIR БЪЛГАРСКА ФОНДОВА БОРСА (Bulgarian Stock Exchange) •
CROATIACompetent national authority responsible for the supervision and execution of EMIR The Croatian Financial Services Supervisory Agency (Hrvatska agencija za nadzor financijskih usluga – “HANFA”) and the Croatian National Bank (Hrvatska narodna banka – “HNB”) are the bodies that supervise the implementation of EMIR in the Republic of Croatia.
HANFA is obliged to supervise financial and non-financial counterparties, excluding credit institutions which are supervised by the HNB.
National implementation laws and regulations The EMIR Regulations are directly applicable in Croatia since Croatia’s accession to the EU on 1 July 2013. The Croatian Act on Implementation of the EU Regulation 648/2012 (Zakon o provedbi Uredbe (EU) br. 648/2012 – “ZOPU”) which entered into force on 1 July 2013 executes and manages the obligation under EMIR. In addition to ZOPU, the Croatian Capital Market Act (Zakon o tržištu kapitala) and the Credit Institutions Act (Zakon o kreditnim instritucijama) are also applicable to EMIR implementation in Croatia.
Competent national authority’s measures to control central counterparties
According to ZOPU, HANFA is authorised to:
1. request from central counterparties access to: (i) and copy of any document in any form; and (ii) any existing records of telephone calls and data transfers;
2. request from central counterparties access to all required data, statements and to summon and question persons;
3. perform on-the-spot inspections, with or without prior notification;
4. when necessary, request any data, documents and statements and inspect the business activities of the following persons: (i) persons closely connected with the central counterparties that are subject to HANFA’s supervision; (ii) individuals / legal entities with whom the supervised central counterparties have externalised a business process; and (iii) qualifying investors of the central counterparties;
5. cooperate with all other competent bodies, including HNB.
When a violation is established, HANFA may: (i) order the termination of wrongful conduct;
(ii) issue a warning; (iii) order the suspension of trading with a financial instrument (or abolish a suspension that it has already ordered); and (iv) order the blocking of a financial instrument. In addition, HANFA may: (v) temporarily prohibit the performance of activities for which the supervised entity has a license / approval issued by HANFA; (vi) abolish the licence / approval; or (vii) order appropriate measures that contribute to maintaining lawful conduct.
HANFA is allowed to make public actions taken resulting from violations of the EMIR Regulations and the ZOPU public. In such cases publication can only be prevented should the publication seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.
According to ZOPU, HNB performs supervisory activities pursuant to the laws regulating credit institutions.
National rules on penalties applicable to violations of EMIR and national law provisions If a financial counterparty, non-financial counterparty or a central counterparty does not comply with the provisions of EMIR or provisions of ZOPU, HANFA will punish such company with a fine in the amount of up to HRK 500,000 (approximately EUR 67,000), and its responsible representatives with a fine of up to HRK 50,000 (approximately EUR 6,700). In addition, for not complying with the provisions of EMIR or the provisions of ZOPU, fines may also be imposed on the: (i) trading venue, in the amount of up to HRK 500,000 (approximately EUR 67,000); responsible persons will be punished with a fine in the amount of up to HRK 50,000 (approximately EUR 6,700); (ii) clearing members, in the amount of up to HRK 150,000 (approximately EUR 20,000); responsible persons will be punished with a fine in the amount of up to HRK 30,000 (approximately EUR 4,000); and (iii) qualifying investors, in the amount of up to HRK 150,000 (approximately EUR 67,000); responsible persons (in the case of legal entities) will be punished with a fine in the amount of up to HRK 30,000 (approximately EUR 4,000).
Derivative trades on the following regulated markets do not fall under EMIR
• Zagrebačka Burza (Zagreb Stock Exchange)
CZECH REPUBLICCompetent national authority responsible for the supervision and execution of EMIR Act No. 256/2004 Coll., on business activities on the capital market, as amended (the “Capital Market Act”), provides for the regulation of the financial market in the Czech Republic.
The Czech National Bank (the “CNB”) supervises and executes EMIR in the Czech Republic.
The CNB will, at the national level, cooperate with ESMA.
National implementation laws and regulations EMIR Regulations have been implemented into Czech law by Act No. 241/2013 Coll., on amending certain acts with respect to the adoption of the act on investment companies and investment funds and the adoption of a directly applicable EU regulation on the clearing of certain derivatives (the “Implementing Act”). The Implementing Act amended the Capital Market Act and Act No. 15/1998 Coll., on supervision in the capital market sector, as amended (the “Capital Market Supervision Act”) and came into effect on 19 August 2013.
Competent national authority’s measures to control central counterparties The CNB controls the performance of the obligations set forth by EMIR Regulations and national laws. In addition to the regular obligatory reporting, which aims to guarantee better overall supervision, the CNB is, under Sec. 4(1) and Sec. 8(1) of the Capital Market
Supervision Act, authorised to:
1. request information from anyone, including auditors;
2. request clarification of facts from anyone;
3. request provision of records, reports or associated data transmitted via electronic communications networks;
4. perform on-the-spot control; for the purpose of such control, the CNB can invite an auditor, an audit company or an expert to be present at the on-thespot control; and
5. request publishing of information that is required to be published.
Financial counterparties, non-financial counterparties as well as CCPs are obliged to collaborate and comply with the CNB’s demands and requests. In case they do not comply, the CNB may impose a disciplinary fine up to the amount of CZK 5,000,000 (approximately EUR 185,000). The disciplinary fine can be imposed repeatedly up to a total amount of CZK 20,000,000 (approximately EUR 740,000).
National rules on penalties applicable to violations of EMIR and national law provisions The CNB is authorised to impose (i) financial penalties as well as (ii) non-financial measures for any breach of EMIR Regulations and national laws. In case a financial counterparty, non-financial counterparty or a CCP does not comply with the provisions of EMIR Regulations, Capital Market Act and / or Capital Market Supervision Act, i.e., does not perform its duties or breaches any prohibition, the CNB can impose a fine up to the amount of CZK 10,000,000 (approximately EUR 370,000).
The CNB can also impose remedial measures such as:
Derivative trades on the following regulated markets do not fall under EMIR • Burza Cenných Papírů Praha, a.s. (Prague Stock Exchange) • Power Exchange Central Europe, a.s. (Power Exchange Central Europe) • RM-Systém, Česká Burza Cenných Papírů a.s. (RM-System) Contact