The European Banking Federation (EBF) plans to update its European Master Agreement (EMA), which allows the clearing of derivatives and deposits, to the latest regulatory updates. This measure responds to calls from market participants and could offer an EU legal option to users of derivatives after the UK`s withdrawal from the European Union. >: it allows traders to potentially document all commercial transactions under a single framework contract, including repo transactions and securities lending. The structure of the agreement is open to new product approaches to be added in order to extend the scope of the agreement to other financial transactions such as currencies, swaps and options 6. In the context of agreements involving an agent or a main intermediary, it is strongly recommended to sign, in addition to these standard agreements, an operational memorandum between the beneficial owner and this intermediary (z.B. Depotbank). This document is intended to describe in detail all the processes from trading to the end of the transaction. > Therefore, the arrangements to be taken in the event of the issuance of preferential rights or other equivalent measures should be clearly defined by all parties prior to the imposition of a securities loan, taking due account of local market rules and practices and any time limits imposed by local representatives or depositaries of the different parties. In addition, lenders should be aware that if they lend their entire holding of a given security, they may no longer receive information about company events in this regard.
> With regard to the recall of securities or the replacement of guarantees, the rights and obligations of each party as well as the procedure to be followed and the period of return of securities should be clearly defined. Some users of derivatives may wish to have the possibility to use, after Brexit, an agreement subject to European law. For example, it could help to circumvent the problems posed by Article 55 of the EU Bank Recovery and Resolution Directive. It stipulates that contracts with financial institutions in the European Economic Area must contain a clause stipulating that a regulatory authority may contain part of the liabilities of these institutions in the event of a crisis. In addition, the EMA is useful for companies in countries where there are no local legal agreements, such as Bulgaria.B. Non-Isda agreements represent a small but significant part of the derivatives literature. Isda`s 2013 margin survey showed that such agreements account for about 13% of all warranty documents. The European Master Agreement (EMA) was published in 1999 by the European Banking Federation in collaboration with the European Savings Banks Group. The EMA aimed to consolidate different framework agreements used within the euro area and certain neighbouring countries into a single set of harmonised documents, in particular for pension operations and securities lending. At the same time, the parties to the EMA may choose the applicable law, jurisdiction and contractual language and take into account different specific national legal requirements.
The EMA should first replace the framework contracts that existed under the legislation of different countries in continental Europe and that were mainly (but not exclusively) used in the national context. . . .
