With 91 percent of all euro-denominated interest-rate swap contracts being cleared in the UK (per first half of 2021), the proposed requirements for EU firms to set up an “active account” with a domestic clearinghouse is the major news in the European Commission’s EMIR 3.0 proposal in December. As policy analyst Karel Lannoo looks into the topic, in an article on pensions news site IPE, he sees a big lack, however: The supervision of CCPs still hasn’t been centralised on EU level, but stays with the national watchdogs.

“Bringing more clearing onshore will increase volumes, but as long as supervision remains at national level in the EU, for the 13 EU based CCPs, resilience will not necessarily improve,” writes Karel Lannoo, head of the Centre for European Policy Studies (CEPS), in the IPE article.

“EMIR 2.2 already subjected third-country CCPs to direct oversight by the European Supervisory Authorities (ESAs), without doing the same for EU-based ones.”

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“Half-baked”

Karel Lannoo also points out that the rules will disfavour EU-based firms, as the requirement for an active CCP account in the EU will hit them but not their competitors in other parts of the world.

“Bottom line, this is a half-baked proposal. On one hand, it attempts to strengthen the EU’s strategic autonomy in the domain of CCPs, where dependence from the UK is significant. But on the other hand, it avoids the confrontation with the Member States on supervision. If the EU’s aim is to make the European CCP ecosystem more attractive and competitive, then it is time to start breaking some eggs,” he concludes.