“It seems we may finally have some clarity in Q1 or Q2 next year,” cheers a post in the newsletter of Clarus Financial Technology – on the issue of the “active account requirement” which the EU sees as a path to a larger part of the clearing market share in some securities. In the meantime, the company has collected recent stakeholder statements that indicate the direction.
If the European Parliament has its way, a requirement to clear “at least a proportion of trades through the active account should be phased in gradually,” relays the Clarus Financial Technology newspost, authored by its frequent writer Chris Barnes. The post also covers market-share trends for the clearing of some asset classes that are touched by the discussion, including euro-nominated interest rate derivatives, and short-term interest rate futures such as €STR.
So what makes the CCP account “active”? The European Parliament expects it to be posting initial and daily variation margins, have necessary connectivity and internal processes in place, and to stay functioning also if clearing activity spikes.
The very detailed position of the European Commission includes the suggestion that all new trades of the respective counterparty in the derivative contracts should be possible to clear in the account, if a counterparty has above 6 billion euro in outstanding notional.