Clearing houses are pushing back on proposed regulatory constraints around collateral concentration, according to a response submitted by the European Association of CCP Clearing Houses (EACH) to ESMA’s consultation on collateral and investment rules.
In the document, EACH states that it “agree[s] with ESMA’s suggestion that it is not necessary to prescribe specific concentration limits” in technical standards. It adds that “decisions regarding the calibration of concentration limits should… lie with the CCP,” rather than being set through fixed regulatory thresholds.
The association argues that uniform limits could be “insufficiently risk-sensitive” and may not reflect the diversity of CCP models and markets. It also notes that overly prescriptive requirements could introduce inefficiencies without improving risk management outcomes.
Guarantees and operational setup
On the use of guarantees as collateral, EACH supports applying concentration controls but calls for flexibility in how these are implemented. It suggests CCPs should be able to define limits, such as capping the proportion of margin covered by guarantees and ensuring diversification across issuers.
The response also addresses how guarantees are structured, stating that rules should accommodate both CCP-only and joint CCP–clearing member beneficiary models, as this “reflect[s] how guarantees are actually used in practice.”
EACH also highlights operational considerations, calling for clarity in definitions and cautioning against overly rigid requirements. It stresses that certain elements should remain adaptable to ensure they are “clear, objective and operationally workable,” according to the response submitted to ESMA.
