1 Case Id: bf4b8873-1ec2-4747-967a-391952023ac2 Date: 27/07/2015 15:40:24 Public consultation on Regulation (EU) no 648/2012 on OTC derivatives, central counterparties and trade repositories Fields marked with * are mandatory. Important comment: this document is a working document of the Financial Stability, Financial Services and Capital Markets Union Directorate General of the European Commission for discussion and consultation purposes. It does not purport to represent or pre-judge any formal proposal of the Commission. Introduction The Regulation On 4 July 2012 the Council and the European Parliament adopted Regulation (EU) No . 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) EMIR responded to the that: "All standardised commitment by G-20 leaders in September 2009 OTC derivatives contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at latest. OTC derivatives contracts should be reported to trade repositories". The core requirements set out under EMIR are:
Transcript
11.
Case Id: bf4b8873-1ec2-4747-967a-391952023ac2Date: 27/07/2015 15:40:24
Public consultation on Regulation (EU)no 648/2012 on OTC derivatives, centralcounterparties and trade repositories
Fields marked with * are mandatory.
Important comment: this document is a working document of the FinancialStability, Financial Services and Capital Markets Union Directorate General of the
European Commission for discussion and consultation purposes. It does notpurport to represent or pre-judge any formal proposal of the Commission.
Introduction
The RegulationOn 4 July 2012 the Council and the European Parliament adopted Regulation (EU) No
.648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR)
EMIR responded to the that: "All standardisedcommitment by G-20 leaders in September 2009OTC derivatives contracts should be traded on exchanges or electronic trading platforms,where appropriate, and cleared through central counterparties by end-2012 at latest. OTCderivatives contracts should be reported to trade repositories".
The core requirements set out under EMIR are:
Clearing and risk mitigation obligations for OTC derivative contracts;
Clearing and risk mitigation obligations for OTC derivative contracts;Reporting obligations for derivative contracts;Requirements for Central Counterparties;Requirements for Trade Repositories.
EMIR has been further supplemented by a number of delegated and implementing acts, someof which are adopting regulatory and implementing technical standards developed by theEuropean Supervisory Authorities (ESAs) in accordance with their mandates under theRegulation. Unless otherwise specified, references to EMIR should therefore be considered toinclude both the primary Regulation (Regulation (EU) No 648/2012) and relevant delegatedand implementing acts.
Report on the RegulationIn accordance with Article 85(1) of EMIR, the Commission is required to prepare a generalreport on EMIR which shall be submitted to the European Parliament and the Council, togetherwith any appropriate proposals.
The Commission must in particular:
(a) Assess, in cooperation with the members of the ESCB (the European System of CentralBanks), the need for any measure to facilitate the access of CCPs to central bank liquidityfacilities;
(b) Assess, in coordination with ESMA and the relevant sectoral authorities, the systemicimportance of the transactions of non-financial firms in OTC derivatives and, in particular, theimpact of this Regulation on the use of OTC derivatives by non-financial firms;
(c) Assess, in the light of experience, the functioning of the supervisory framework for CCPs,including the effectiveness of supervisory colleges, the respective voting modalities laid downin Article 19(3), and the role of ESMA, in particular during the authorisation process for CCPs;
(d) Assess, in cooperation with ESMA and ESRB, the efficiency of margining requirements tolimit procyclicality and the need to define additional intervention capacity in this area;
(e) Assess in cooperation with ESMA the evolution of CCP’s policies on collateral marginingand securing requirements and their adaptation to the specific activities and risk profiles of theirusers.
The Commission services will also take into account when preparing the report any other keyissues that have been identified during the implementation of EMIR to date. In particular, theCommission services will take into account the findings of reports submitted by ESMA inaccordance with Article 85(3) of EMIR.
FeedbackThe purpose of this document is to consult all stakeholders on their views and experiences inthe implementation of EMIR to date. Interested parties are invited to send their contributions by13 August 2015 through the online questionnaire below. Only responses received through theonline questionnaire will be included in the report summarising responses. The responses tothis consultation will provide important guidance to the Commission services in preparing theirfinal report.
Responses to this consultation should relate to the legislative text of EMIR. Responses
3
Responses to this consultation should relate to the legislative text of EMIR. Responsesare expected to be of most use where issues raised in response to the questions aresupported with data or detailed narrative, and accompanied by specific suggestions forsolutions to address them. Such suggestions may relate to either the primaryRegulation or to relevant delegated and implementing acts. Supplementary questionsproviding for free text repsonses may appear depending on the response to a multiplechoice question.
The Commission services recognise that certain core requirements and procedures providedfor under EMIR are yet to be implemented or completed. In particular, at this stage clearingobligations and obligations to exchange collateral in respect of non-cleared OTC derivativestransactions are not yet in force. It is therefore envisaged that the report required under Article85(1) will focus primarily on those aspects of EMIR which have been implemented.
Nonetheless, the Commission services welcome the views of stakeholders as to any identifiedissues with respect to the implementation of upcoming requirements. However, thisconsultation does not seek views on any regulatory technical standards that have not yet beenadopted by the Commission. This includes the proposed regulatory technical standards on themandatory clearing of certain interest rate products in accordance with Article 5 of EMIR,delivered to the Commission by ESMA on 3rd October 2014 and the joint draft regulatorytechnical standards of the ESAs on margin for uncleared OTC derivatives transactionsmandated in accordance with Article 11(3) of EMIR.
Further, with respect to the regulatory and implementing technical standards on trade reportingadopted by the Commission in accordance with Article 9 of EMIR (Regulation No. 148/2013and Regulation No. 1247/2012) the Commission services note that ESMA recently conductedits own consultation on amended versions of these standards. This consultation does thereforenot seek any views with respect to the content of either and Regulation No. 148/2013
nor the amended versions proposed by ESMA.Regulation No. 1247/2012
The Commission services will publish all responses received on the Commissionwebsite unless confidentiality is requested.
Please note: In order to ensure a fair and transparent consultation process only responses and included in thereceived through our online questionnaire will be taken into account
report summarising the responses. Should you have a problem completing this questionnaireor if you require particular assistance, please contact [email protected]
More information:
on this consultationon the protection of personal data regime for this consultation
1. Information about you
*Are you replying as:a private individualan organisation or a companya public authority or an international organisation
*Is your organisation included in the Transparency Register?(If your organisation is not registered, , although it is not compulsorywe invite you to register hereto be registered to reply to this consultation. )Why a transparency register?
YesNo
*If so, please indicate your Register ID number:
51436554494-18
*Type of organisation:Academic institution Company, SME, micro-enterprise, sole traderConsultancy, law firm Consumer organisationIndustry association MediaNon-governmental organisation Think tankTrade union Other
*Where are you based and/or where do you carry out your activity?
*Contributions received are intended for publication on the Commission’s website. Do you agreeto your contribution being published?( )see specific privacy statement
Yes, I agree to my response being published under the name I indicate (name of your)organisation/company/public authority or your name if your reply as an individual
No, I do not want my response to be published
2. Your opinion
Part I - Questions on elements of EMIR to be reviewed
Question 1.1: CCP LiquidityArticle 85(1)(a) states that: “The Commission shall …… assess, in cooperation with the membersof the ESCB, the need for any measure to facilitate the access of CCPs to central bank liquidityfacilities”.
There are no provisions under EMIR facilitating the access of CCPs authorised under EMIR toadditional liquidity from central banks in stress or crisis situations, either from the perspective ofthe members of the ESCB or from the perspective of CCPs. However, it is recognised that insome member states, CCPs are required to obtain authorisation as credit institutions inaccordance with Article 6 of Directive 2006/48/EC. Such authorisation creates access to centralbank liquidity for those CCPs. On the other hand, other member states do not require CCPs toobtain such an authorisation.
Is there a need for measures to facilitate the access of CCPs to central bank liquidity facilities?5000 character(s) maximum
Yes. It would be appropriate for CCPs to benefit from access to Central
Bank liquidity as this would further strengthen CCP resilience and
ultimately end-user confidence in central clearing. Given the resources
available to recover a CCP under the current arrangements, it would be
furthermore reasonable to expect Central Banks to provide liquidity to
the failing CCP.
If your answer is yes, what are the measures that should be considered and why?5000 character(s) maximum
Following a CCP default, end-users may also face significant problems to
meet cash Variation Margin (VM) calls from (surviving) clearing members
as well as other counterparties. Unlike banks, most end-users do not
have direct access to central bank liquidity facilities which means they
have to rely on cash resources, the repo market or selling assets in the
market. This may trigger additional defaults and significantly increase
systemic risk. Therefore, emergency liquidity arrangements should also
be implemented in such a stress scenario. In addition, Central Banks
could play the role of becoming a bridging facility in the event that
positions in a failed CCP have to be transferred to another CCP or
closed out completely.
Such liquidity arrangements should be available in all the currencies
which the CCP clears. Central Banks should seek a coordinated and shared
approach at the EU level as a minimum, and ideally at the international
level, for achieving the common objective of global financial stability.
7
Question 1.2: Non-Financial FirmsArticle 85(1)(b) states that: “ The Commission shall…..assess, in coordination with ESMA and therelevant sectoral authorities, the systemic importance of the transactions of non-financial firms inOTC derivatives and, in particular, the impact of this Regulation on the use of OTC derivatives bynon-financial firms;”
Non-financial counterparties are subject to certain requirements of EMIR. However, suchcounterparties will not be subject to the requirements to centrally clear or to exchange collateralon non-centrally cleared transactions provided that they are not in breach of predefinedthresholds, in accordance with Article 10 of EMIR. Further, it is recognised that non-financialcounterparties use OTC derivative contracts in order to cover themselves against commercialrisks directly linked to their commercial or treasury financing activities. Such contracts aretherefore excluded from the calculation of the clearing threshold.
(a) Are the clearing thresholds for non-hedging transactions (Article 11, Regulation (EU) No149/2013) and the corresponding definition of contracts objectively measurable as reducing risksdirectly relating the commercial activity or treasury financing activity (Article 10, Regulation (EU)No 149/2013) adequately defined to capture those non-financial counterparties that should bedeemed as systemically important?5000 character(s) maximum
If your answer is no, what alternative methodology or thresholds could be considered to ensurethat only systemically important non-financial counterparties are captured by higherrequirements under EMIR?5000 character(s) maximum
(b) Please explain your views on any elements of EMIR that you believe have created unintendedconsequences for non-financial counterparties. How could these be addressed?5000 character(s) maximum
8
(c) Has EMIR impacted the use of, or access to, OTC derivatives by non-financial firms? Pleaseprovide evidence or specific examples of observed changes if so.5000 character(s) maximum
Question 1.3: CCP CollegesArticle 85(1)(c) states that: “The Commission shall….assess, in the light of experience, thefunctioning of the supervisory framework for CCPs, including the effectiveness of supervisorycolleges, the respective voting modalities laid down in Article 19(3), and the role of ESMA, inparticular during the authorisation process for CCPs.”
In order for a CCP established in the Union to provide clearing services, it must obtainauthorisation under Article 14 of EMIR. EMIR introduced a college system for the granting of suchauthorisation, which has, to date, been used for the process of authorisation of sixteen CCPs. TheCollege comprises members from relevant competent authorities, relevant members of theEuropean System of Central Banks and ESMA.
(a) What are your views on the functioning of supervisory colleges for CCPs?5000 character(s) maximum
(b) What issues have you identified with respect to the college system during the authorisationprocess for EU CCPs, if any? How could these be addressed?5000 character(s) maximum
Question 1.4: ProcyclicalityArticle 85(1)(d) states that: “The Commission shall….assess, in cooperation with ESMA andESRB, the efficiency of margining requirements to limit procyclicality and the need to defineadditional intervention capacity in this area.”
CCPs authorised in the Union must take into account potential procyclical effects whencalculating their margin requirements. The specific factors that must be considered to avoiddisruptive movements in margin calculations are provided for under Article 41 EMIR and Article28 of Commission Delegated Regulation (EU) No 153/2013.
9
(a) Are the requirements under Article 41 EMIR and Article 28 Regulation (EU) No 153/2013adequate to limit procyclical effects on CCPs’ financial resources?5000 character(s) maximum
BlackRock supports the mandatory central clearing of standardised and
sufficiently liquid OTC derivative contracts for which there are at
least two viable CCPs offering client clearing services. However, we
remain concerned that there is currently no mechanism available to
suspend the clearing obligation in emergency situations when clearing is
no longer appropriate.
Following a CCP default, which is likely to occur following a default of
multiple clearing members, market participants would aim to hedge or
replace positions. In the period of stress following default it may be
impossible to clear transactions because surviving clearing members and
CCPs may not be willing to accept additional risk but there may be
market participants who are willing to transact bilaterally.
A brief suspension of the clearing obligation may help end users to
execute certain transactions bilaterally, which they are unable to
execute via the CCP. This is likely to reduce systemic risk and give end
users some flexibility which may be essential at that time.
Specifically, we believe it is critical that ESMA has the tools to
dis-apply the clearing obligation in the event that:
• a CCP notifies ESMA that the liquidity of a class (or contracts
within a class) has deteriorated to an extent that it may become
difficult for the CCP to risk manage such derivative class; and/or
• the liquidity of the class (or contracts within a class)
becomes materially less than that on the basis of which ESMA originally
determined to make the relevant class subject to mandatory clearing.
In such cases and in the absence of a termination or suspension of the
clearing obligation, CCPs may find themselves clearing more risk in a
contract or product than there would be market capacity to manage upon a
member default. A CCP may therefore have no option but to encourage
participants to reduce these cleared positions by increasing margin
requirements to levels at which it is uneconomic to hold the positions,
and thus force the risk to be closed out. Participants would not then be
able to replace the closed out cleared contracts with uncleared
contracts, as the clearing obligation would still apply in respect of
those contracts, leaving hedgers exposed and potentially forcing them to
contract their businesses. In contrast, if the clearing obligation were
terminated, firms would be afforded the option to de-clear the product
and maintain their positions on an uncleared basis.
BlackRock recommends that EMIR be amended to include a mechanism to
enable the short-notice suspension or termination of the clearing
obligation in emergency situations.
10
If your answer is no, how could they be improved?5000 character(s) maximum
(b) Is there a need to define additional capacity for authorities to intervene in this area?5000 character(s) maximum
If your answer is yes, what measures for intervention should be considered and why?5000 character(s) maximum
Question 1.5: CCP Margins and CollateralArticle 85(1)(e) states that: “The Commission shall….assess, in cooperation with ESMA theevolution of CCP’s policies on collateral margining and securing requirements and theiradaptation to the specific activities and risk profiles of their users.”
Collateral collected by way of initial and variation margin requirements is the primary source offinancial resources available to a CCP. Title IV of EMIR and Commission Delegated Regulation(EU) No 153/2013 provide detailed requirements for the calculation of margin levels by CCPs aswell as defining the assets that may be considered eligible as collateral.
(a) Have CCPs’ policies on collateral and margin developed in a balanced and effective way?5000 character(s) maximum
In general terms, BlackRock believes the right balance between the
liquidity needs of the CCP and its participants has been largely
achieved. Although CCPs should be free to set the scope of eligible
collateral themselves, regulators should ensure that appropriate
haircuts are applied to anything other than high quality, liquid assets.
If your answer is no, for what reasons? How could they be improved?5000 character(s) maximum
11
(b) Is the spectrum of eligible collateral appropriate to strike the right balance between the liquidityneeds of the CCP and its participants?5000 character(s) maximum
If your answer is no, for what reasons? How could it be improved?5000 character(s) maximum
Part II - General questions
Question 2.1: Definitions and ScopeTitle I of the Regulation contains Articles 1-2.
Article 1 determines the primary scope of the Regulation, in particular with regard to public andprivate entities.
Article 2 provides definitions in use throughout the Regulation which further determine the scopeof application of certain of its provisions.
Are there any provisions or definitions contained within Article 1 and 2 of EMIR that have createdunintended consequences in terms of the scope of contracts or entities that are covered by therequirements?5000 character(s) maximum
Whilst we welcome the amendments made to the front-loading requirement
for Category 1 and 2 market participants, it remains a material issue
for the majority of the buy-side.
By removing the front-loading requirement for Financial Counterparties
(FCs) under the threshold and for Non-Financial Counterparties, we
understand the intention was to limit the impact on smaller funds.
However, in order to classify FCs as either category 2 or 3, the
calculation will have to be performed across all market participants.
Delays and uncertainties around this process are likely to result in
some brokers being unwilling to transact on a bilateral basis post the
initiation of the front loading period. BlackRock would recommend that
the front loading requirement be limited to Category 1 market
participants for future clearing mandates.
12
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.2: Clearing ObligationsUnder EMIR, OTC derivatives transactions that have been declared subject to a clearingobligation must be cleared centrally through a CCP authorised or recognised in the Union. ESMAhas proposed a first set of mandatory clearing obligations for interest rate swaps which are yet tocome into force. Counterparties are therefore in the process of preparing to meet the clearingobligation, to the extent that their OTC derivatives contracts are in scope of the requirements.
(a) With respect to access to clearing for counterparties that intend to clear directly or indirectly asclients; are there any unforeseen difficulties that have arisen with respect to establishing clientclearing relationships in accordance with EMIR?5000 character(s) maximum
Although BlackRock has not experienced any material difficulties in
establishing clearing relationships for mandatory asset classes under
EMIR, this is not likely to be the case for a number of smaller market
participants. The principal causes of this are the capital charges banks
incur on their client clearing business.
This seems paradoxical given the G-20s stated interest in promoting
greater use of clearing.
Although the Basel Committee has made several adjustments to the
leverage ratio framework that will reduce the impact on clearing, these
reforms need to go further in order to truly reflect the risk reducing
nature of central clearing. For instance, segregated initial margin
should be recognised as reducing exposure under the leverage ratio.
Failure to do so will likely result in a reduction of firms offering
client clearing, leading to higher fees for some and a complete lack of
clearing opportunities for other smaller market participants.
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
13
(b) Are there any other significant ongoing impediments or unintended consequences with respectto preparing to meet clearing obligations generally in accordance with Article 4 of EMIR?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.3: Trade reportingMandatory reporting of all derivative transactions to trade repositories came into effect inFebruary 2014. The Commission services are interested in understanding the experiences ofreporting counterparties and trade repositories, as well as national competent authorities, inimplementing these requirements. As noted above, ESMA recently conducted its ownconsultation on amended versions of these standards. This consultation does therefore not seekany views with respect to the content of either Regulation No. 148/2013 and Regulation No.1247/2012 nor the proposed amended versions.
Are there any other significant ongoing impediments or unintended consequences with respect tomeeting trade reporting obligations in accordance with Article 9 of EMIR?5000 character(s) maximum
14
From our experience of reporting to date, and feedback from other market
participants, we question whether dual-sided reporting has had the
effect the intended by Article 9 of EMIR.
Many of the problems BlackRock has faced with dual-sided reporting
relate to the lack of standardisation and optionality in how data is
presented by both parties. Despite industry efforts to amend standards
to reduce these issues, dual-sided reporting will always require scarce
resources to be focused on matching trades (possibly across different
trade repositories) rather than in ensuring the accuracy of the report
itself.
Additionally, market participants who do not have the ability to report
directly themselves, are restricted in their range of counterparties to
those who are willing to report on their behalf. The diverse nature of
market participants and the processes they use to report, means that
automating a matching reconciliation is difficult. In contrast,
reconciling a single sided report made to a trade repository against the
non-reporting parties' own records is relatively straight forward and a
high level of automation is possible which enables a more comprehensive
and accurate process.
In our view, single sided reporting with an obligation on the
non-reporting party to ensure data accuracy, is highly likely to improve
data integrity as well as reducing ‘noise’. Furthermore, this transition
from dual-sided to single- sided could be accomplished relatively easily
by the majority of the market as it simply focuses attention on an
existing part of the current process, rather than creating a new
requirement.
Should single-sided reporting be deemed an unacceptable outcome, we
would recommend that CCPs are required to accept trade reports from
entities with lapsed LEIs and to include these in the reconciliation
process. Currently, although CCPs will accept in reports from an entity
whose LEI has lapsed, they are not included in the reconciliation
process which hampers the ability to resolve breaks and improve data
quality.
The process for renewing LEIs on an annual basis is relatively new and
it’s likely that many market participants are unaware of the requirement
or that it is simply missed. Outright rejection of trades for these
accounts is a blunt tool for highlighting this issue and will lead to
further degradation of the data quality. It would be preferable for
these reports to be included and for the CCP to generate a separate
report of the accounts where the LEIs have lapsed in order to highlight
this to the market participants.
15
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.4: Risk Mitigation TechniquesRisk mitigation techniques are provided for under Articles 11(1) and 11(2) of EMIR and furtherdefined in Commission Delegated Regulation (EU) No 149/2013. Risk mitigation techniquesbegan entering into force in March 2013 and apply to OTC derivative transactions that are notcentrally cleared. They include obligations with respect to transaction confirmation, transactionvaluation, portfolio reconciliation, portfolio compression and dispute resolution.
Are there any significant ongoing impediments or unintended consequences with respect tomeeting risk mitigation obligations in accordance with Articles 11(1) and (2) of EMIR?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.5: Exhange of CollateralArticle 11(3) of EMIR mandates the bilateral exchange of collateral for OTC derivative contractsthat are not centrally cleared. Article 11(15) mandates the ESAs to further define this requirement,including the levels and type of collateral and segregation arrangements required. The ESAsconsulted publically on their draft proposals in the summer of 2014.
The ESA are now in the process of finalising these draft Regulatory Technical Standards. It istherefore recognised that the final requirements are not fully certain at this stage. TheCommission services are not seeking comment on the content on the proposed rules publishedby the ESAs. Nonetheless the Commission services welcome any views from stakeholders onimplementation issues experienced to date.
16
Are there any significant ongoing impediments or unintended consequences anticipated withrespect to meeting obligations to exchange collateral in accordance with Article 11(3) underEMIR?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.6: Cross-Border Activity in the OTC derivatives marketsOTC derivatives markets are global in nature, with many transactions involving Unioncounterparties undertaken on a cross-border basis or using third country infrastructures. EMIRprovides a framework to enable cross-border activity to continue whilst ensuring, on the one hand,that the objectives of EMIR are safeguarded and on the other hand that duplicative and conflictingrequirements are minimised.
(a) With respect to activities involving counterparties established in third country jurisdictions; arethere any provisions or definitions within EMIR that pose challenges for EU entities whentransacting on a cross-border basis?5000 character(s) maximum
EU counterparties trading with non-EU counterparties established in, or
subject to the rules of, an Article 13(2) equivalent jurisdiction should
be able to elect which set of equivalent rules would apply to a
particular trade between them. This flexible, pragmatic approach would
allow for situations where EU firms entered into transactions with
counterparties that are obliged to comply with another ruleset – for
example, where an EU counterparty trades with an entity designated as a
US person but also subject to EU rules, the entity would need the
ability to choose to apply US rules.
The lack of substantive convergence between the rules of different
jurisdictions and the absence of equivalence determinations will act as
an incentive to market participants to focus their trading activity in
their local markets and further catalyse market fragmentation. This
will likely result in increased trading costs as a result of liquidity
fragmentation, loss of market efficiencies and ultimately damage to the
real economy. We do not believe this is an intended policy outcome and
is not in the best interests of Europe’s end-investors.
17
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
(b) Are there any provisions within EMIR that create a disadvantage for EU counterparties overnon-EU entities?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.7: TransparencyThe overarching objective of the trade reporting requirement under EMIR is to ensure thatnational competent authorities and other regulatory bodies have data available to fulfil theirregulatory mandates by monitoring activity in the derivatives markets.
Have any significant ongoing impediments arisen to ensuring that national competent authorities,international regulators and the public have the envisaged access to data reported to traderepositories?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
18
Question 2.8: Requirements for CCPsTitles IV and V of EMIR set out detailed and uniform prudential and business conductrequirements for all CCPs operating in the Union. CCPs operating prior to EMIR’s entry into forceare required to obtain authorisation in accordance with the new requirements of EMIR, throughthe EU supervisory college process.
(a) Are there any significant ongoing impediments or unintended consequences with respect toCCPs’ ability to meet requirements in accordance with Titles IV and V of EMIR?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
(b) Are the requirements of Titles IV and V sufficiently robust to ensure appropriate levels of riskmanagement and client asset protection with respect to EU CCPs and their participants?5000 character(s) maximum
If your answer is no, for what reasons? How could they be improved?5000 character(s) maximum
(c) Are there any requirements for CCPs which would benefit from further precision in order toachieve a more consistent application by authorities across the Union?5000 character(s) maximum
19
If your answer is yes, which requirements and how could they be better defined?5000 character(s) maximum
Question 2.9: Requirements for Trade RepositoriesTitles VI and VII of EMIR set out detailed and uniform requirements for all trade repositoriesoperating in the Union. Trade repositories operating prior to EMIR’s entry into force are requiredto obtain authorisation by ESMA in accordance with the requirements of EMIR. To date, ESMAhas authorised six trade repositories. ESMA is the primary supervisor for Union trade repositoriesand has the power to issue fines for non-compliance with the requirements of EMIR.
Are there any significant ongoing impediments or unintended consequences with respect torequirements for trade repositories that have arisen during implementation of Titles VI and VII ofEMIR, including Annex II?5000 character(s) maximum
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
Question 2.10: Additional Stakeholder FeedbackIn addition to the questions set out above, the Commission services welcome feedback fromstakeholders on any additional issues or unintended consequences that have arisen during theimplementation of EMIR which are not covered by those questions.
20
Are there any significant ongoing impediments or unintended consequences with respect to anyrequirements or provisions under EMIR and not referenced in the preceding questions that havearisen during implementation?5000 character(s) maximum
BlackRock has previously responded to ESMA’s discussion paper
(ESMA/2014/876) on the calculation of counterparty risk by UCITS for OTC
financial derivative transactions subject to clearing obligations.
We strongly support ESMA’s view that the provisions on the counterparty
risk limits for OTC financial derivative transactions in the UCITS
Directive should be amended to take into account the clearing obligation
for certain types of OTC financial derivative transaction under EMIR.
With the regulatory focus on delivering a robust regime for the
regulation, management and capitalisation of CCPs, we do not believe
that limits should be applied to ESMA authorised or recognised CCPs for
either exchange traded derivatives (“ETDs”) or cleared over the counter
(“OTC”) activity. However, if European Commission considers that a
specific limit is required, then we believe more analysis is needed on
what the appropriate limits should be.
We would also flag that access to CCPs in multiple jurisdictions
represents an important risk diversification for many UCITS and any
unfavourable treatment or restrictions resulting from diverse models of
non-EU CCPs would have a negative impact on the UCITS.
We would recommend that, consistent with CESR guidance, the UCITS can
exclude certain exposures from any such calculations – provided
appropriate client asset protection is in place.
If your answer is yes, please provide evidence or specific examples. How could these beaddressed?5000 character(s) maximum
3. Additional information
Should you wish to provide additional information (e.g. a position paper, report) or raise specificpoints not covered by the questionnaire, you can upload your additional document(s) here:
