In two separate consultations, the European Securities and Markets Authority seeks the public’s input on clearing-related topics. One is on clearing and trading obligations relating to the ongoing benchmark transitions, the second on the CCP recovery regime. In addition to these consultations, ESMA is also publishing a methodology to assess third-country CCPs’ systemic importance.
The first consultation is on the derivatives clearing obligations (CO) and trading obligations (DTO) in view of the transition of interest-rate benchmarks. As the legacy EONIA and LIBOR rates are scrapped and replaced by alternative risk-free rates, ESMA reviews the regulatory technical standards that specify classes of derivatives that are subject to the obligations. It is on this review that ESMA is now launching its consultation.
The second consultation, to get stakeholder feedback on how to implement its CCP recovery mandates, are actually not just one but seven consultation papers. These contain “among others, proposals for Draft Regulatory Technical Standards (RTS) on the methodology for calculation and maintenance of the additional amount of pre-funded dedicated own resources, Guidelines on the consistent application of the triggers for the use of Early Intervention Measures as well as Guidelines on CCP recovery plan indicators and scenarios”. ESMA presents more detail here.
Thirdly, also within the clearing domain, ESMA has just published a methodology for assessing third-country CCPs’ systemic importance. The 15-page pdf is here. It relates to article 25(2c) of EMIR, which lets ESMA assess whether a foreign CCP is so systemically important it ought to be blocked from offering certain clearing services. It does not mention specific countries of CCPs, but an interesting recent event in the market has been, as an effect of Brexit, that clearing house LCH Ltd has gone from being insider to outsider in the eyes of the EU.