Commission’s Implementing Regulation

European Commission Extends Transitional Period for Capital Requirements for Banks’ Exposures to CCPs

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On June 4, 2015, the European Commission published the provisional text of the Implementing Regulation it has adopted to extend the transitional period for capital requirements for EU banking groups’ exposures to central counterparties (CCPs) under the Capital Requirements Regulation (Regulation 575/2013) (CRR).

The current transitional period, which was introduced by an earlier Implementing Regulation, expires on June 15, 2015. The new Implementing Regulation will extend the transitional period by six months to December 15, 2015.

In an accompanying press release, the Commission explains that capital charges for exposures to CCPs are higher if the CCP is not authorized or recognized under EMIR (that is, for a CCP not considered as “qualifying”). Since the authorization and recognition processes take time, the CRR provides a transitional period during which the higher capital requirements will not be applied, to ensure a level playing field. As the authorization and recognition processes for existing CCPs serving EU markets will not be fully completed by June 15, 2015, the Commission has extended the transitional phase to December 15, 2015.

ESMA Publishes Final Report on Reporting to Trade Repositories Under EMIR

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On August 8, the European Securities and Markets Authority (ESMA) published its final report to the European Commission proposing that the start date for reporting exchange traded derivatives to trade repositories be postponed by one year to January 2015.

ESMA proposes to amend Article 5 of the Commission’s Implementing Regulation (1247/2012), which sets out the implementing technical standards (ITS) on the format and frequency of reporting to trade repositories under the Regulation on OTC derivative transactions, central counterparties and trade repositories (Regulation 648/2012) (EMIR).

The current reporting start dates in Article 5 do not distinguish the methods of trading (exchange traded derivatives as against over-the-counter).  ESMA believes that specification of exchange traded derivatives is necessary to ensure harmonized reporting.  The delay allows ESMA time to develop guidelines and recommendations to ensure that reporting is consistent and capable of being efficiently used, and will allow time for their implementation by counterparties, trade repositories and regulators.  Final Report.