The European Securities and Markets Authority (ESMA) has issued a public statement on deprioritising supervisory actions linked to the eligibility of uncollateralised public guarantees, public bank guarantees, and commercial bank guarantees for Non-Financial Counterparties (NFCs) acting as clearing members, pending the entry into force of EMIR 3.
The European Commission has proposed an amendment to EMIR 3. Following extensive negotiations, the Council and the European Parliament reached a provisional agreement on the updated text on 7 February 2024. The European Parliament subsequently adopted the agreement on 24 April 2024. The final EMIR 3 text is expected to be adopted and published in the Official Journal before the end of 2024, entering into force 20 days later.
A significant aspect of EMIR 3 is the provision on the eligibility of uncollateralised public guarantees, public bank guarantees, and commercial bank guarantees as collateral by Central Counterparties (CCPs). This measure allows CCPs to accept fully uncollateralised bank guarantees to cover their initial and ongoing exposures to Non-Financial Counterparties (NFCs) acting as clearing members and clients, under specified conditions. This provision aims to make permanent the temporary amendments to Delegated Regulation (EU) No 153/2013, introduced during the energy crisis to alleviate liquidity concerns for NFCs. These temporary measures are set to expire on 7 September 2024.
Risks
Stakeholders have raised concerns about the risks of allowing these emergency measures to lapse before the new provisions come into effect, potentially reducing the pool of eligible collateral for NFCs. Legally, neither ESMA nor national authorities can suspend directly applicable EU legislation. ESMA also lacks the tools or powers to grant forbearance in such cases. Therefore, any changes would need to be enacted through EU legislation.
In light of the challenges stakeholders may face between the expiry of the emergency measures and the implementation of EMIR 3, ESMA expects national authorities to not prioritise supervisory actions regarding the eligibility of uncollateralised guarantees for NFCs. They are advised to apply their risk-based supervisory powers proportionately during this period.
