Dodd-Frank and EMIR

Problems in the OTC derivatives market were highlighted during the financial crisis by the nearcollapse of Bear Sterns in March 2008, the default of Lehman Brothers on 15 September 2008 and the bailout of AIG. In response there has been an international effort to increase stability in the financial market.

  Dodd-Frank EMIR
Issuer US Government European Commission
Region USA EU
Effective July 21, 2010 Late 2012

The objective of the Dodd-Frank Wall Street Reform and Consumer Protection Act is to promote the financial stability of the United States by improving accountability and transparency in the financial system.

The law covers a wide array of financial reforms, but a few of the titles focus on derivatives reform specifically including Title IV Regulation of Advisers to Hedge Funds and Other Institutions, Title VI Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions and Title VII Wall Street Transparency and Accountability "The Derivatives Legislation".

EMIR (European Market Infrastructure Regulation) was geared towards increasing transparency and reducing the credit risks that came to prominence during the financial crisis in 2008.

EMIR introduces; a reporting obligation for OTC derivatives; a clearing obligation for eligible OTC derivatives; measures to reduce counterparty credit risk and operational risk for bilaterally cleared OTC derivatives; common rules for central counterparties (CCPs) and for trade repositories; and rules on the establishment of interoperability between CCPs.

How FINCAD can help

FINCAD solutions provide financial professionals with the ability to perform the derivatives valuation and risk measurement information (market and credit risk) at the individual trade or portfolio level. In addition, all FINCAD solutions are fully documented showing the math and formulas used in the calculation.

Applicable FINCAD solutions:

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We hope that such information will assist you, but it should not be used or relied upon as a substitute for your own independent research. For a more comprehensive view of the standards/requirements, please visit the respective issuer's website.