Mrs Bowles flagged out the following key points in her draft opinion:
· When should a clearing obligation start? Bowles mentioned that there is a current debate on whether or not the legislation should be retrospective. She stressed that a retrospective legislation could damage the entity. At the same time, policymakers should take into account that the US may start implementing their rules before the EU implements EMIR, so it is important to see if the EU wants to backload to the moment when third country’s legislation starts running the clearing obligation or not. These contracts will need to be reopened and it will imply a cost for the entity. Back loading into data repositories should not be a problem.
· She highlighted that the principle of non-discrimination is presented under amendments 20-23. It is not appropriate that CCPs should give different terms to different organizations. The criteria should be based on risk management and not by who owns the organizations. CCPs have to concentrate on default management in order to avoid that that tax payers are assuming the risks.
· Commercial companies are granted an exemption and this exemption should be checked by an Auditor.
· Amendment 39 deals with the extension of the exemption of non-financial companies. She said that currency exchange derivatives are necessary to manage the financing of the commercial company. Moreover, if the text is exempting corporates, then it also makes sense to exempt the pension funds of these corporates.
· To grant an exemption for Pension Funds, it is important that Pension Funds can have the flexibility to cover their investments with OTC derivatives. Moreover, this is important taking into account the current demographic challenge that we are facing in Europe.
· Amendment 26 states that all reporting should be done according to international standards. She explained that this is to make it simpler and easier to compare reporting internationally.
· It is also important to make sure that we have the right data protection standards in Europe.
· She said that segregation of assets will increase costs. Therefore, segregation of assets should be available to those who want it but should not be mandatory.
· Finally she said that the EP wants enough discretion to check that ESMA’s recommendations are followed by the Commission.
Next Steps:
· Deadline for Amendments: 4 February 2011
· Vote in JURI committee: 28 February 2011
JURI committee opinion (link)
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