The ECBC welcomes the fact that the ESAs have acknowledged the special features of covered bond-related derivatives and allowed for these to be excluded from bilateral collateral posting of initial and variation margins, while ensuring the derivative counterparties a degree of protection by outlining specific conditions that have to be met.
The ECBC invites the ESAs to take into consideration a number of additional issues including: excluding derivatives that satisfy the requirements in Article 3 GEN, i.e. those which are excluded from the bilateral collateral posting of initial and variation margins due to their special features when calculating the group thresholds for non-centrally cleared derivatives in Article 1 FP “Final provisions”; making the relief for covered bond-related derivatives two-way, i.e. also applying this to covered bond derivative counterparties; adding the words “insolvency-related” before “default” in paragraph 1(a) of Article 3 GEN .
“The ECBC is supportive of the goal of improving the resilience, transparency and efficiency of the OTC derivatives market and, in particular, welcomes the efforts of the European Institutions and the ESAs to take into account the specificities of covered bonds,” said Luca Bertalot, EMF-ECBC Secretary General.
Full press release
© ECBC - European Covered Bond Council
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