Interest on excess reserves and UK EMIR REFIT: Difference between pages

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(IOER).  
''Financial services - regulation - derivatives - European Union (EU) - UK - retained EU law.''


Regulated commercial banks and other depositary institutions are generally required to hold minimum levels of deposits with their central bank, in relation to their liabilities or for other regulatory reasons.  
EMIR REFIT is an update to the European Market Infrastructure Regulation that reduced its requirements for certain market participants, to make it more proportionate to their circumstances.


These central bank deposits are known as 'reserves'.
(EMIR REFIT is sometimes also known as EMIR II.)




In some cases, these deposits of the commercial banks with the central bank may be greater than the minimum level required by the regulations.
UK EMIR REFIT contains the related amendments to the derivatives market regime for the UK.


When the central bank pays interests on such deposits, this interest is known as 'interest on excess reserves'.


:<span style="color:#4B0082">'''''Making the UK EMIR regime more proportionate'''''</span>


Payment of interest on excess balances means that banks are less likely to lend central bank deposits ([[reserves]]) among themselves (in 'interbank' or (US) 'federal funds' transactions) at rates below the rate paid on the excess.  
:"The onshored UK EMIR REFIT brings into UK legislation amendments to UK EMIR that make the regime more proportionate for certain firms.  


Varying the interest rate on excess reserves, then, allows the central bank to influence short-term rates in the economy generally.
:Key changes include:


:#Financial counterparties that are considered small (small financial counterparties or SFCs) are exempted from the clearing obligation, while remaining subject to risk mitigation obligations.
:#Non-financial counterparties (NFCs) are subject to reduced clearing obligations.
:#The exemption from the clearing obligation for Pension Scheme Arrangements (PSAs) is extended by another 4 years for UK and EEA PSAs.
:#A streamlined reporting regime, including mandatory delegation to FCs when facing an NFC, and exemption from the reporting requirements for intragroup transactions when one of the counterparties is an NFC."


In the US the Federal Reserve introduced a policy, its 'IOR policy', of paying interest on monetary institutions deposits ('reserves') in October 2008 and both required and excess reserves are remunerated.
:''UK EMIR REFIT - Financial Conduct Authority''


The Financial Services Regulatory Relief Act of 2006 authorised payment of interest on balances of or on behalf of depositary institutions beginning October 1, 2011 but the Emergency Economic Stabilization Act of 2008 accelerated the effective date to October 1, 2008.


== See also ==
* [[Binding Technical Standard]]
* [[Brexit]]
* [[Central counterparty]]
* [[Derivative instrument]]
* [[EEA]]
* [[EMIR]]
* [[EMIR REFIT]]
* [[Equivalence]]
* [[European Union]]
* [[Financial Conduct Authority]]
* [[FRANDT]]
* [[Harmonisation]]
* [[Infrastructure]]
* [[Margining]]
* [[Onshore]]
* [[MiFID II]]
* [[NFC]]
* [[Over the counter]]
* [[Retained EU law]]
* [[Statutory instrument]]
* [[Trade repository]]
* [[UK EMIR ]]


==See also==
* [[Federal Open Market Committee]]
* [[Reserve requirements]]
* [[Reserves]]


[[Category:Long_term_funding]]
==External link==
*[https://www.fca.org.uk/markets/uk-emir UK EMIR - Financial Conduct Authority]
 
[[Category:Accounting,_tax_and_regulation]]
[[Category:Compliance_and_audit]]
[[Category:Compliance_and_audit]]
[[Category:Financial_products_and_markets]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_reporting]]
[[Category:Risk_frameworks]]
[[Category:The_business_context]]

Latest revision as of 09:47, 16 November 2023

Financial services - regulation - derivatives - European Union (EU) - UK - retained EU law.

EMIR REFIT is an update to the European Market Infrastructure Regulation that reduced its requirements for certain market participants, to make it more proportionate to their circumstances.

(EMIR REFIT is sometimes also known as EMIR II.)


UK EMIR REFIT contains the related amendments to the derivatives market regime for the UK.


Making the UK EMIR regime more proportionate
"The onshored UK EMIR REFIT brings into UK legislation amendments to UK EMIR that make the regime more proportionate for certain firms.
Key changes include:
  1. Financial counterparties that are considered small (small financial counterparties or SFCs) are exempted from the clearing obligation, while remaining subject to risk mitigation obligations.
  2. Non-financial counterparties (NFCs) are subject to reduced clearing obligations.
  3. The exemption from the clearing obligation for Pension Scheme Arrangements (PSAs) is extended by another 4 years for UK and EEA PSAs.
  4. A streamlined reporting regime, including mandatory delegation to FCs when facing an NFC, and exemption from the reporting requirements for intragroup transactions when one of the counterparties is an NFC."
UK EMIR REFIT - Financial Conduct Authority


See also


External link

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