ESMA proposes rules on derivatives central counterparties and trade repositories
The European Securities and Markets Authority (ESMA) has launched a consultation on its technical standards under the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR), which is aimed at improving the functioning of OTC derivatives markets in the European Union (EU).
EMIR aims to achieve this by reducing risks via the use of central clearing and risk mitigation techniques, increasing transparency via trade repositories (TR) and ensuring sound and resilient central counterparties (CCPs).
The implementation of EMIR is a key element in the EU’s programme to meet the G20 commitments of strengthening the global financial regulatory system and ensuring sounder and more resilient markets.
Steven Maijoor (pictured), ESMA Chair, says: “OTC derivatives impact both financial markets and the real economy but have not been subject to regulatory requirements. This absence has resulted in negative consequences for financial markets, investors and the real economy.
“The draft technical standards developed by ESMA set out the measures for the implementation of the regulatory framework established under EMIR. These measures will ensure that EMIR’s objectives of reducing risks arising from OTC derivatives, improving transparency and ensuring sound and resilient central counterparties will be applied in practice.
“These proposals will contribute to enhancing the protection of investors and promote stable and well-functioning financial markets in the EU, and allow the EU to play its role in strengthening the global financial regulatory system.”
The Consultation Paper contains draft Regulatory Technical Standards (RTS) and draft Implementing Technical Standards (ITS) which set out the specific details of how EMIR’s requirements are to be implemented. The requirements set out in the draft technical standards will ensure:
Reduction of counterparty risks by:
Defining the framework for the application of the clearing obligation;
Specifying the risk mitigation techniques for OTC derivatives not centrally cleared;
Laying down the requirements for the application of exemptions to non-financial counterparties and intragroup transactions.
Safe and resilient CCPs by:
A comprehensive set of organisational, conduct of business and prudential requirements for CCPs.
Increased transparency by:
Specifying the details of derivatives transactions that need to be reported to trade repositories;
Defining the trade repositories’ data to be made available to relevant authorities;
Setting the information to be provided to ESMA for the authorisation and supervision of trade repositories.
ESMA’s Consultation Paper is based on the EMIR texts as adopted by the European Parliament on 29 March 2012 and by the Council on 11 April 2012.
The consultation closes on 5 August 2012 and the final draft standards are intended to be submitted to the EU Commission for endorsement by 30 September 2012.
ESMA will hold a public hearing on 12 July 2012 in Paris and registration is open to all interested participants.
- Special Reports
- By Location
- Asian Hedge Funds
- BVI Hedge Fund Services
- Bermuda Hedge Fund Services
- Canada Hedge Fund Services
- Cayman Hedge Fund Services
- Channel Islands Stock Exchange
- Future of offshore funds
- Gibraltar Hedge Fund Services
- Guernsey Hedge Fund Services
- Hedge Funds in Germany
- Hong Kong Hedge Fund Services
- Ireland Hedge Fund Services
- Isle of Man Hedge Fund Services
- Jersey Hedge Fund Services
- Jersey Private Equity Services
- Latin American Hedge Funds
- London Hedge Fund Services
- Luxembourg Hedge Fund Services
- Luxembourg Private Equity Services
- Malta Hedge Fund Services
- Middle East Hedge Fund Services
- Singapore Hedge Fund Services
- South African Hedge Fund Services
- Spanish Hedge Funds 2008
- Switzerland Hedge Funds
- US East Coast Hedge Fund Services
- US Hedge Fund Services
- By Subject
Latest Special Report
- By Location