The European Securities and Markets Authority (ESMA) has published new advice on changes to the European Markets and Infrastructure Regime (EMIR), providing advice for the European Commission’s EMIR review.
Recommendations include changes to clearing obligations, third-country CCPs and trade repository rules, plus the reports required under article 85 of EMIR covering non-financial counterparties, pro-cyclicality and the segregation and portability of CCPs.
ESMA Chair Steven Maijoor said: “EMIR is a key component of the EU’s regulatory reform package in response to the financial crisis, affecting many elements of OTC derivatives markets.”
“While its implementation is still underway we recommend a number of changes, based on our experiences, to improve and streamline the regulatory and supervisory framework and to ensure that the objectives of stability and investor protection are met.”
For clearing obligation, ESMA suggests EMIR should introduce new tools allowing for suspension of obligations in specific market conditions, and to generally make the process for determining obligations smoother. The advice also suggests removing the requirement for frontloading.
ESMA also suggests a change to the entire equivalence and recognition process for third-county CCPs, to improve the efficiency of the process. The advice points out regulatory differences between third-party countries and says that recognition decisions should be governed by regulatory technical standards, and should include risk-based considerations, allowing suspension of recognition for third-party CCPs.
With regards to improving supervision of trade repositories, ESMA suggests making changes to its own powers of supervision and enforcement. It would increase fines, expand the level of enforcement that ESMA is responsible for, and implement appropriate timeframes for considering applications in the registration process. It suggested it should also clarify the trade repositories’ obligations for data quality, reconciliation and supervisory reporting.
