The review aims to make the EU clearing landscape more attractive and resilient, to support the EU’s open strategic autonomy and to preserve the EU’s financial stability.
The Council and the Parliament reached a provisional political agreement today on a review of the European market infrastructure regulation and directive.
I’m glad that the we have found an agreement today on the review of European market infrastructure rules. This will bring more clearing services to Europe and enhance our strategic autonomy. It will also contribute to stabilising the market and make sure it functions efficiently, which is a prerequisite for a fully-fledged capital markets union.
Vincent Van Peteghem Minister of Finance of Belgium
The European Market Infrastructure Regulation (EMIR) lays down rules on over-the-counter (OTC) derivatives, central counterparties (CCPs) and trade repositories. The proposed EMIR review contains several legislative measures to improve EU clearing services, notably by streamlining and shortening procedures, improving consistency between rules, strengthening CCP supervision and requiring market participants of substantial systemic importance, who are subject to a clearing obligation, to have an operationally active account at an EU CCP.
Main elements of the provisional agreement
The Council and Parliament ensured that in practice it is feasible for supervisory authorities to apply streamlined supervisory processes, such as authorisation and validation procedures.
The provisional agreement strengthens cooperation, coordination and information sharing among supervisors and ESMA, while ensuring an appropriate division of tasks between national authorities and ESMA.
The agreement also strengthens the role of ESMA providing it with a coordination role in emergency situations, while providing clarity that ultimate decision making powers are the responsibility of the national competent authorities.
ESMA will also take the role of co-chair of supervisory colleges together with the relevant national competent authorities, who will keep ultimate decision making powers. Furthermore, ESMA will be informed about and may request to be invited to on-site examinations and provide opinions in an extended range of areas.
The provisional agreement sets a solid active account requirement (AAR) that will require certain financial and non-financial counterparties to have an account at an EU CCP, which includes operational elements such as the ability to handle the counterparty’s transactions at short notice if need be and activity elements so that the account is effectively used.
This is ensured by a number of requirements, which have to be fulfilled by these accounts, including requirements for counterparties above a certain threshold to clear trades in the most relevant sub-categories of derivatives of substantial systemic importance defined in terms of class of derivative, size and maturity. Furthermore, a Joint Monitoring Mechanism is created to keep track of this new requirement....
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