In a document dated Monday 10 October, Polish MEP Danuta Hübner (EPP) refined the various compromise proposals with a view to reaching an agreement on measures to reduce excessive exposure to third country central counterparties (CCP) and improve the efficiency of European clearing markets, notably through a revision of the European Market Infrastructure Regulation (EMIR) (see EUROPE 13246/14).
A significant part of the work focused on the technical standards and other provisions aimed at defining whether an account opened with an authorised CCP is active or not.
For example, the Polish rapporteur’s compromise confirms that the European Securities and Markets Authority (ESMA) would be tasked with developing draft technical regulatory standards to specify the frequency with which new positions must be entered into the same account for it to be considered ‘active’. However, ESMA would have twelve months after the date of entry into force of the text - compared with six initially - to submit these draft technical standards to the Commission.
ESMA should then, “on the basis of an aggregated average”, calculate and monitor the level of activity of derivatives contracts and transmit this information to the joint supervisory mechanism. This point had also been supported by French MEPs Aurore Lalucq (S&D) and Claude Gruffat (Greens/EFA) by means of amendments. ESMA would be responsible for setting up this joint supervisory mechanism, which would be made up of representatives of ESMA and members of the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA).
ESMA would also be required, in cooperation with the joint supervisory mechanism, to submit a report assessing several aspects, such as the number of accounts opened with authorised CCPs, the volume of activity that financial counterparties and non-financial counterparties maintain on active accounts in relation to their overall contract clearing activity, and the frequency with which new active accounts are opened with authorised CCPs. Danuta Hübner has also increased the deadline for submitting this report from 18 to 36 months from the entry into force of the text.
ESMA would also be responsible for assessing whether the requirements set out in the text sufficiently mitigate the risks to financial stability in the EU or in one or more Member States. The rapporteur proposes two options for the development of other technical standards in this area.
The first proposes that ESMA alone should take into account various aspects such as the costs, risks and potential impacts of imposing a proportion of activity on different types of financial counterparties or non-financial counterparties, or market developments that may require a new assessment. The second option, based on criteria that differ only slightly, would require ESMA to work with EBA, EIOPA and the European Systemic Risk Board.
To see the document: https://aeur.eu/f/912 (Original version in French by Thomas Mangin)