ESMA Publishes Guidelines on the EU Implementation of CPSS-IOSCO Principles

On September 4, ESMA published the translation of guidelines and recommendations on implementing the principles for financial market infrastructures in respect of central counterparties (i.e., clearing houses) published by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) in April 2012.

The purpose of the guidelines and recommendations is to ensure that EMIR and the regulatory technical standards made under it are fully harmonized and compliant with the CPSS and IOSCO principles.  This will bring EU clearing houses into line with international standards. Guidelines.

ESMA Publishes Responses to Consultation on the Clearing Obligation Under EMIR

On August 19, ESMA published a list of responses received in respect of its first consultation on the clearing obligation relating to draft regulatory technical standards (RTS) for the clearing of interest rate swaps under EU Regulation 648/2012 on OTC derivative transactions, central counterparties and trade repositories (EMIR).  The first consultation was published on July 11 and proposed that basis swaps, fixed-to-float interest rate swaps, forward rate agreements and overnight index swaps should be subject to central clearing.

ESMA will use the responses received to draft its final RTS which will then be subject to endorsement by the European Commission. Responses.

ESMA Publish Report on Guidelines and Recommendations Relating Principles for Financial Market Infrastructures in Respect of Central Counterparties

On August 5, ESMA published a report setting out guidelines and recommendations for the implementation of the principles for financial market infrastructures in respect of central counterparties (CCPs) published by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO).

The guidelines and recommendations apply to competent authorities and trade repositories when carrying out their duties under EU Regulation 648/2012 on OTC derivative transactions, central counterparties and trade repositories (EMIR).  As is explained in the report, the purpose of the guidelines and recommendations is to ensure that EMIR, and the regulatory technical standards made under it, is fully harmonized and compliant with the CPSS and IOSCO principles.  Report.

ESMA Discussion Paper on Calculation of Counterparty Risk by UCITS for OTC Derivatives Subject to EMIR Clearing

On July 23, ESMA published a discussion paper on how the limits on counterparty risk in centrally cleared OTC derivative transactions under the UCITS IV Directive should be calculated, and whether the same rules for both OTC transactions that are centrally cleared and for exchange-traded derivatives (ETDs) should be applied.

The UCITS IV Directive allows UCITS to invest in both ETDs and OTC derivatives, but only investments in OTC derivatives are currently subject to counterparty risk exposure limits.

The consultation closes on October 22, 2014.  ESMA will use the feedback to determine its final views on the appropriate way forward, including a possible recommendation to the European Commission on a modification of UCITS IV.  Discussion Paper.

Central Securities Depositories Regulation (CSDR) Update

On July 23, the Council of the EU published a press release announcing that it had adopted the CSDR on improving securities settlement and regulating central securities depositories.

The European Commission published a letter on July 23 (dated June 23, 2014) to ESMA setting out a provisional request for technical advice concerning possible delegated acts relating to certain settlement discipline measures and aspects relating to supervisory co-operation under the CSDR.

The letter attaches two formal mandates for technical advice to assist the Commission in preparing delegated acts as required by Articles 7 (penalties for settlement fails) and 14 (supervisory co-operation) of the CSDR.

The commission has requested ESMA to provide its technical advice nine months after the CSDR enters into force.  Press ReleaseLetterFormal Mandates.

ESMA Chair Speech on Systemic Risks and Current Policies in EU Fund Industry

On June 10, the Chair of the European Securities Markets Authority (ESMA) gave a speech on systemic risks and current policies in the EU fund industry, which considers whether asset managers can be too big to fail.

Among other topics, the speech outlined ESMA’s priorities on the Alternative Investment Fund Managers Directive (AIFMD), bearing in mind that the transitional period for full implementation comes to an end in July 2014. ESMA is looking to develop its existing Q&A document, and invites comments on any further topics stakeholders would like to see included in it.  Speech.

ESMA Updates Q&A on EMIR Implementation

On March 20, ESMA published an updated version of its questions and answers document (Q&A) on the implementation of EMIR (the Regulation on over-the-counter (OTC) derivatives, central counterparties (CCPs) and trade repositories (TRs)) (Regulation 648/2012).  The updated Q&A includes a table of questions on pages 6 and 7, setting out which questions have been updated as of March 20, 2014, and to which article(s) in EMIR the updated questions relate.  They include:

    • Intragroup transactions;
    • Notional amounts;
    • Risk mitigation techniques for OTC derivative contracts not cleared by a CCP;
    • Reporting of outstanding positions following the entry into force of EMIR (backloading); and
    • Various issues relating to TR reporting requirements.  ESMA Q&A.

Responses to ESMA and EBA Consultation on Guidelines for Complaints Handling in the Securities and Banking Sectors

On March 19, the European Securities and Markets Authority (ESMA) published a list of the responses it received to its November 2013 consultation on draft guidelines for complaints handling in the securities and banking sectors.  The list includes responses from the following bodies:

    • Association for Financial Markets in Europe;
    • British Bankers’ Association;
    • European Banking Federation;
    • European Fund and Asset Management Association.

ESMA and the European Banking Authority (EBA), who carried out the consultation jointly with ESMA, intend to publish a final report and guidelines in the first quarter of 2014.  Competent authorities will be expected to incorporate the guidelines into their supervisory practices as appropriate.  ESMA List of Responses.

ESMA Publishes MiFID II Implementation Speech

On February 25, ESMA published a speech by ESMA Executive Director Verena Ross on the issues surrounding the implementation of MiFID II.

The issues include the following:

  • ESMA will publish a discussion paper on MiFID II technical standards once the European Parliament has approved the final text of MiFID II.
  • More frequent processing of requests and issuance of opinions on pre-trade waivers by ESMA.
  • ESMA expects to be involved in the decisions on the compatibility of national competent authorities’ proposed position limits for commodity derivatives.
  • Information on the transparency and micro-structural regimes provided for in Level 2 will be maintained and published by ESMA, together with ensuring consistent implementation and monitoring their effects on the EU markets, with periodic recalibration of these parameters where required.
  • Q&As will be issued by ESMA when the MiFID II Level 2 measures enter into force.   Speech.

ESMA Publishes CRA III Regulation Implementation Consultation Paper

On February 11, ESMA published a consultation paper on the implementation of the CRA III Regulation containing draft regulatory technical standards (RTS) on the following:

    • The content and format of fees charged by Credit Rating Agencies (CRAs) to their clients for the ongoing supervision provided by ESMA, together with pricing policy.
    • The requirements for adequate information that must be published by issuers, originators and sponsors in relation to structured finance instruments and their underlying assets, together with updating requirements. A standard disclosure template is also provided.
    • Up-to-date information on the outlooks and ratings issued by CRAs will be provided on the European Rating Platform (ERP) website. In order to integrate them into the ERP, the draft RTS includes changes to ESMA’s regulatory reporting system and its database on performance statistics and rating activity.

The consultation closes on April 11, 2014, with a public hearing to be held on March 14, 2014. The draft RTS must be submitted for endorsement to the European Commission by June 21, 2014.  Consultation Paper.