Ema European Master Agreement

Posted on: April 9th, 2021

Some derivatives users may wish to have the opportunity to use an agreement subject to EU law after Brexit. For example, it could help to circumvent the problems raised by Article 55 of the European Directive on the Recovery and Resolution of Banking Failures. It states that contracts with financial institutions in the European Economic Area must contain a clause stipulating that a regulatory authority can save some of its obligations in the event of a crisis. The EMA is a multi-jurisdictional, multi-product agreement: the European Master Agreement (EMA) was published in 1999 by the European Banking Federation in collaboration with European Savings Banks Group. The EMA aimed to consolidate into a single set of harmonised documents, various master`s contracts used in the euro area and in some neighbouring countries, notably for the repurchase of trans shares and securities lending. At the same time, the parties to the EMA can choose the applicable law, competence and language of the contract and take into account different specific national laws. The EMA was first conceived as a substitute for master`s contracts in force under the laws of different continental European countries, which were used primarily (but not exclusively) in the national context. However, it should also be adapted to cross-border transactions. The European Federation of Banks and Banks (EBF) intends to update its European Master`s Agreement (EMA), which allows the clearing of derivatives and deposits, to take account of recent regulatory updates. This measure responds to the demands of market participants and could offer a Community law option to derivatives users after the UK`s withdrawal from the European Union. In the context of agreements involving a representative or a senior intermediary, it is strongly recommended that, in addition to these standard agreements, an operating memorandum be signed between the economic beneficiary and that intermediary (z.B.

Depotbank). This document should describe in detail all processes from discussion to the end of the transaction. > Therefore, the provisions to be followed in the event of the issuance of preferential rights or other group action should be clearly defined by all parties before granting a security loan, taking due account of local market rules and practices as well as the deadlines set by local representatives or custodians of the various parties. In addition, lenders should be aware that if they lend their entire shareholding in a given guarantee, they may not receive information about a company`s events. > With regard to recalling or replacing security, it is necessary to specify the rights and requests of each party as well as the procedure to be followed and the time to return the securities.