Three European regulators have joined forces to voice their disagreement with the European Commission’s proposed amendments to the final draft regulatory technical standards (RTS) for over-the-counter derivatives.
The European Banking Authority (EBA) along with the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority have rejected the commission’s proposal to remove concentration limits on initial margins for pension schemes, claiming that these are crucial for risk mitigating.
The European supervisory authorities (ESAs) also recommended that further clarity was needed regarding non-centrally cleared derivatives concluded by central counterparties that are not covered by this regulation.
In a statement on the joint opinion, the EBA noted that ambiguity in this area has been a "source of concern for stakeholders".
Further details are also needed for the application of the RTS to transactions concluded with third-country counterparties, particularly non-financial counterparties.
Additionally, the ESAs highlighted a contradiction between the commission’s proposed additional condition for covered bonds and the European Market Infrastructure Regulation (EMIR).
Specifically, the amendment would have the effect of ranking derivatives counterparties after bond holders, which is contrary to the reasoning established in EMIR to grant preferential treatment to cover bonds.
Finally, according to the ESAs, a number of wording changes proposed by the commission require amendments as they may lead to a different application of the provisions compared to their original text of the RTS.
