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Version date: 31 March 2015 - onwards

OTC Question 23: Effect on existing trades [last update 31 March 2015]

 Article 2 of RTS on Third Country contracts

Article 2 RTS on Third Country contracts - Effect on existing trades

(a) Does the RTS on Third Country contracts apply to OTC derivative contracts concluded before the date of entry into force of the RTS?

(b) Does the RTS on Third Country contracts apply to OTC derivative contracts made after the entry into force of the RTS, but covered by a guarantee which meets the conditions set out in the RTS which was provided before the entry into force of the RTS?

OTC Answer 23

(a) No and this answer is also set out in paragraphs 44 and 45 of ESMA’s Final Report dated 15 November 2013 on the RTS.

(b) Yes and the last paragraph of Article 2(1) expressly contemplates that application. If there is a change in some of the inputs to the calculation against the threshold, i.e. the inclusion in a guarantee of an additional existing trade or an increase in the amount of the guarantee, then relevant contracts entered into after the effective date of the RTS would be brought within scope of Article 2. The parties to the relevant arrangements for the OTC derivatives then falling within the scope of the RTS would be required promptly to meet the relevant requirements.