On Monday 3 August, the three European Supervisory Authorities (EBA, EIOPA and ESMA) published, draft regulatory technical standards (RTS) aimed at easing certain margin requirements laid down by the Regulation on market infrastructures (EMIR) (see EUROPE 13527/34) in respect of uncleared over-the-counter derivatives. The text proposes amending a delegated regulation of the European Commission (2016/2251) for counterparties whose aggregate month-end average notional amount (‘AANA’) of the relevant derivatives is below the threshold of €8 billion.
At present, when a company or financial institution falls below this threshold – calculated on the basis of the average notional amount of its non-centrally cleared OTC derivatives – it no longer has to post an initial margin for its new contracts concerned. This margin is financial collateral set aside by both parties to a transaction in order to protect themselves against losses that could arise if one of them were to default.
By contrast, the collateral posted for older contracts must currently remain in place. In respect of contracts already under way, the European authorities therefore propose extending the exemption from the requirement to post this collateral, which would make it possible to release assets that have so far been tied up as collateral.
The draft technical standards have been sent to the European Commission for approval. If adopted, they will take the form of a delegated regulation, which will then be subject to scrutiny by the European Parliament and the Council of the EU before being published in the Official Journal of the European Union.
See the European supervisors’ draft technical standards: https://aeur.eu/f/n48 (Original version in French by Bernard Denuit)