The European Fund and Asset Management Association (EFAMA) got together with a number of leading buy-side clearing experts in a webinar held in mid-June. Now available for online viewing, the discussion centred around the main findings of EFAMA’s recent analysis on the EMIR 3.0 proposal that would make mandatory for EU-based market participants to hold active accounts at EU-based clearing houses. Panellists were of the opinion that the move could increase systemic risks instead of lower them.
Buy-side participants involved in the webinar included Allianz Global Investors, Aviva Investors, BlackRock, and Nordea Asset Management. According to the press release summarising the discussion, they “expressed the view that EU CCP volume would most benefit from organic growth driven by expedited regulatory processes and additional requirements on margin model transparency”.
Mandatory active accounts could result in “a monopoly in Europe”, and “lead to a widening basis against other CCPs, exacerbating liquidity pressures, especially in times of market stress”. Participants also pointed out that “without a free choice to clear where the best prices and netting benefits were available, asset managers also expect to struggle in delivering best execution to clients. This would lead to discrimination or unfair treatment of clients”. Overall, they believed that “the lack of a proper impact assessment on the active accounts proposal and the accompanying splitting of liquidity pools, leaves it unclear how this would result in a reduction of systemic risk”.
