On Tuesday 28 November, members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted the two reports by Polish MEP Danuta Hübner (EPP) on the revision of the European Market Infrastructure Regulation (EMIR) (47 votes in favour, 2 against, 4 abstentions) and the omnibus directive amending the sectoral directives (47 votes in favour, 3 against, 3 abstentions). The two texts make up the ‘offsetting’ package.
“I am particularly pleased with the work done with the other groups and the good compromises reached”, said Ms Hübner. Her aim now is to start negotiations with the Council of the EU “before Christmas” and “finalise this dossier, which is crucial for the strength and competitiveness of European capital markets, before the end of the mandate”.
First, Parliament intends to adapt the existing supervisory framework by giving the European Securities and Markets Authority (ESMA) a direct supervisory role over EU central counterparties. According to the rapporteur, this would enable the old framework to be adapted in response to the increase in cross-border exposures cleared by EU central counterparties (CCPs) and to “the systemic interconnection that central clearing creates between CCPs, clearing members and clients”.
However, some sources close to the matter fear that the importance of ESMA’s role will be downgraded during future interinstitutional negotiations (‘trilogues’).
“The Council of the EU will not let this happen, and it is highly unlikely that Parliament’s position will be maintained after the trilogue. We are confident that the trilogue will result in ESMA being the direct supervisor of the EU’s largest central counterparties”, she told EUROPE.
Requirements for active accounts maintained
MEPs also maintained the requirement for clearing members and clients - mainly banks - to hold an active account with a CCP. This provision was one of the measures proposed by the Commission to reduce the dependence of the EU financial system on third countries, in particular the UK, by encouraging financial entities to repatriate their clearing activities within the EU.
However, this measure will be introduced gradually: counterparties will have to open or maintain an active operational account with an EU CCP within 6 months of the Regulation coming into force. Then, 2 years after the text comes into force, the Commission will have to define the proportion of derivatives transactions that must be cleared by an EU central counterparty.
Several criteria will be taken into account in this decision, such as the fact that ESMA is effectively responsible for supervising the CCP, and that the active account does not have a negative impact on the international competitiveness of EU companies or distort competition.
The Greens/EFA group, which called for penalties to be introduced for breaches of active account requirements, was heard. The group’s demands were also taken up on several points, including the obligation for the board of directors of central counterparties to respect the principle of gender parity, and a better exchange of information between ESMA and sector regulators.
Parliament will also begin the trilogues with a position providing for regulatory relief on certain aspects, such as authorisation procedures. In Ms Hübner’s view, this should make it possible to “improve the competitiveness and attractiveness of EU CCPs”. (Original version in French by Thomas Mangin)