Starting on 21 June next year, the central clearing obligation called for by the European Union regulation on derivatives, central counterparties and trade repositories (EMIR) will apply to the first category of over-the-counter derivative contracts and market participants such as exchange-facing private banks.

L'Autorité des marchés financiers (AMF), the French regulator, is hailing this as one of the most important components of the EMIR regulation, intended to make the trading of derivatives a more secure process. The following interest-rate derivatives, denominated in euros, pounds Sterling, Japanese yen and US dollars, will go first:

• fixed-to-float interest rate swaps (also known as plain vanilla);
• float-to-float swaps (also known as basis swaps);
• forward rate agreements (FRAs); and
• overnight index swaps.

Maturities and reference indices are specified in the delegated regulation. Any financial counterparty trading derivative products is subject to the clearing obligation. Non-financial counterparties are only affected if their non-hedging positions exceed certain thresholds.