The consultation on the guidelines on the management of conflicts of interest in central counterparties (CCP), which was launched by the European Securities and Markets Authority (ESMA) on 1 June, closed on 24 August. In its response, which was published on Friday 25 August, the financial operator- the London Stock Exchange Group (LSEG) argued that certain aspects of these guidelines were too prescriptive.
“There are several instances where the objectives pursued by the guidance can be fulfilled in a different, less prescriptive way”, the group states, referring in particular to the rules on the number of contracts, mandates of board members, rules on the ownership of financial instruments and rules on gifts.
The guidelines in question set out the criteria to be applied by CCPs in order to avoid or attenuate the risks of conflict of interest. The potential sources of conflicts to be taken into account by CCPs include the relationship between clearing members and their clients. The LSEG argues that this type of relationship is a situation outside the control of CCPs and should therefore be left out of the guidelines.
The European Association of CCP Clearing Houses agrees. In its response, it argues that “a CCP cannot therefore be aware of all conflicting interests within its customer base and, more importantly, has no legal basis for managing conflicts of interest”. The association - which is calling for this requirement to be dropped - argues that clearing members and their clients should retain the responsibility for identifying and managing their own conflicts of interest.
Lastly, the two organisations also highlight the need to ensure that the provisions of the guidelines are in harmony with the legal framework of the various member states, in order to avoid a situation of double or even contradictory requirements.
On the basis of the responses to this consultation, ESMA will publish a final version of its guidelines by the end of the year. (Original version in French by Marion Fontana)