On September 17, the European Securities and Markets Authority (ESMA) published responses to its July 2013 consultation paper on draft regulatory technical standards (RTS) on contracts having a direct, substantial and foreseeable effect within the EU and on the non-evasion of provisions of EMIR (Regulation 648/2012). Responses. Consultation Paper.
European Securities and Markets Authority
ESMA Publishes Responses to Consultation on Draft RTS on Information Requirements
On September 7, the European Securities and Markets Authority (ESMA) published a consultation paper on draft regulatory technical standards (RTS) on information requirements for the assessment of acquisitions and increases in holdings in investment firms under the Markets in Financial Instruments Directive (2004/39/EC) (MiFID).
The bodies that responded to ESMA’s consultation were:
- European Fund and Asset Management Association (EFAMA)
- Investment Management Association (IMA)
- European Federation of Financial Advisers and Financial Intermediaries (FECIF); and
- European Private Equity and Venture Capital Association (ECVA). Responses to Consultation.
ESMA Publishes Advice to the Commission on Equivalence of Certain Non-EU Countries’ Regulatory Regimes Under EMIR
On September 3, the European Securities and Markets Authority (ESMA) published its advice to the European Commission (the Commission) on the equivalence of the regulatory regimes of Australia, Hong Kong, Japan, Singapore, Switzerland and the United States under EMIR. EMIR is the Regulation applicable to OTC derivative transactions, central counterparties (CCPs) and trade repositories (TRs) (Regulation 648/2012)).
The rules of these countries, covering central clearing, CCPs, TRs and non-financial counterparties and risk mitigation techniques for uncleared trades, were compared with the requirements under EMIR. The supplementary press release proposes conditional equivalence for the following regimes:
- CCPs – Honk Kong, Singapore and the United States;
- Central clearing, requirements for non-financial counterparties and risk mitigation techniques for uncleared trades – Japan and the United States; and
- TRs – the United States.
ESMA’s technical advice should be used by the Commission when preparing any possible equivalence decisions.
ESMA will deliver advice on areas it has not yet covered for Australia, Canada, Hong Kong, India, Singapore, South Korea and Switzerland by October 1. A letter dated September 2 from ESMA Chair Steven Maijoor to Commission Director General of Internal Market and Services Jonathan Faull includes further guidance and detail on the technical advice for certain countries, including the United States.
ESMA Publishes Opinion on Draft Regulatory Technical Standards Under the AIFMD
On August 20, the European Securities and Markets Authority (ESMA) published the opinion it submitted to the European Commission about draft regulatory technical standards (RTS) required under Article 4(4) of the Alternative Investment Fund Managers Directive (AIFMD).
The opinion comes after the Commission’s concerns about ESMA’s approach to the differentiation between open and closed-ended alternative investment funds (AIFs) in the draft RTS. To alleviate the concerns, ESMA has submitted an amended version of the draft RTS for the Commission’s consideration, which are contained in Annex I to the opinion.
Under the amended RTS, the key element for the identification of an open-ended AIF is the existence of repurchases or redemptions of the AIF’s shares or units prior to the commencement of its liquidation phase or wind-down, provided that the repurchases or redemptions happen at the investors’ request. Opinion.
Final ESMA Guidelines on Key Concepts of the AIFMD Published
On August 13, the European Securities and Markets Authority (ESMA) published the final version of its guidelines on key concepts of the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) (ESMA/2013/611).
The purpose of the guidelines is to ensure common, uniform and consistent application of the concepts that comprise the definition of “AIF” (the Alternative Investment Fund) in Article 4(1)(a) of the AIFMD by clarifying each of these concepts.
Competent authorities to which the guidelines apply must notify ESMA within two months of the date of publication whether they comply or intend to comply with the guidelines, with reasons for non-compliance. In the absence of a response by this deadline, competent authorities will be considered as non-compliant. Guidelines.
ESMA Publishes Final Report on Reporting to Trade Repositories Under EMIR
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.
ESMA Publishes Q&As on EMIR
On August 8, the European Securities and Markets Authority (ESMA) published Questions and Answers on the implementation of Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR).
ESMA’s statutory role is to build a common supervisory culture by promoting common supervisory approaches and practices. The Q&As were published to achieve a consistent application of EMIR. The first version of this document was published on March 20, and the second version on June 6. This document is expected to be updated and expanded as and when appropriate.
This version of the Q&As provides guidance on a number of issues including clarification on calculation of the clearing threshold, the nature of segregation and portability and the requirements for registration of trade repositories. Q&As.
ESMA Consults on Non-EU Counterparties OTC Derivative Transactions
On July 17, the European Securities and Markets Authority (ESMA) launched a consultation on draft regulatory technical standards (RTS). The consultation is aimed at implementing the provisions of the European Markets Infrastructure Regulation (EMIR) related to OTC derivative transactions by non-EU counterparties and at preventing attempts by non-EU counterparties to evade EMIR’s provisions.
The consultation paper clarifies conditions where EMIR’s provisions regarding central clearing or risk mitigation techniques applies to OTC derivatives by two non-EU counterparties which have a direct, substantial and foreseeable effect in the EU. The RTS would only apply when (i) two counterparties to the same transaction are established outside the EU; (ii) their jurisdictions’ rules are not considered equivalent to EMIR; and (iii) where either a) one of the two non-EU counterparties is guaranteed by an EU financial counterparty for at least €8 billion of OTC derivatives entered into and for an amount of at least 5% of the OTC derivatives exposures of the EU financial counterparty, or b) the two non-EU counterparties execute transactions via their EU branches. Consultation.
ESMA Approves Global Supervisory Cooperation Agreements Relating to AIFM Directive
On May 30, the European Securities and Markets Authority (ESMA) published a press release relating to global supervisory cooperation on alternative funds.
At its May 22, 2013 meeting, ESMA’s Board of Supervisors approved cooperation agreements (also known as memorandum of understanding (MoUs)) between EU securities regulators with responsibility for supervising alternative investment funds (AIFs) from all 27 member states and 34 of their global counterparts (including those in the USA, India, Australia and Hong Kong). ESMA has negotiated the agreements on behalf of all member states’ securities regulators, as well as the authorities from Croatia, Iceland, Liechtenstein and Norway. Press Release.
EMSA Publishes Guidance on Recognition of Third Country Central Counterparties (TC-CCPs) under EMIR
On March 12, The European Securities and Markets Authority (ESMA) published a guidance on the recognition of TC-CCPs under EMIR (the Regulation on OTC derivatives, CCPs, and trade repositories).
The guidance note reviews ESMA’s recognition process and offers practical guidance for applicants. This includes communication with ESMA prior to an application, the timeframe for submission of an application, the format and content of the application itself, and requests from ESMA for more information. ESMA’s decision on recognition is to be adopted within 180 working days of notification by ESMA that a TC-CCP’s application is considered to be complete, and it will take effect on the fifth working day after its adoption.