ISDA, EBF and FIA write to ESMA on clearing regulatory technical standards
10 June 2020 London
Image: BrAt82/Shutterstock
The International Swaps and Derivatives Association (ISDA) has welcomed the steps that the European Commission and the European Securities and Markets Authority (ESMA) have
taken to ensure that EU derivatives counterparties can rely on the intragroup exemption from clearing under the European Market Infrastructure Regulation (EMIR) when dealing with non-EU affiliates.
Alongside ISDA, the European Banking Federation (EBF) and the Futures Industry Association (FIA) have also shown their support.
The letter was addressed to Steven Maijoor, chair of ESMA, and was sent by Scott O'Malia, CEO of ISDA, Wim Mijs, CEO of EBF, and Walt Lukken, president and CEO of FIA.
The associations did, however, emphasise the continued importance of intragroup transactions both for the ability of EU financial groups to operate, compete and make capital available in non-EU jurisdictions, and to manage risks on a centralised basis therein.
According to the associations, intragroup transactions are also vital to enable non-EU financial groups to provide the capital needed to underpin investment within the EU-27 and to manage risk associated with this activity.
In view of the forthcoming expiry in December 2020 of the intragroup exemption from the clearing obligation under EMIR, the associations requested that the necessary equivalence decisions be adopted as a matter of urgency in relation to all jurisdictions that have implemented clearing rules in line with the G20 commitments.
Secondly, the associations requested that the clearing regulatory technical standards should be amended to extend the current temporary derogation from clearing requirements for intragroup transactions with non-EU affiliates for a further three years for all other jurisdictions.
These steps would be taken as soon as possible during H1 2020, the associations highlighted, in order to prevent market participants from having to initiate and execute costly operational, legal and contractual compliance processes, while also dealing with the uncertainty.
This uncertainty stems from the Commission Delegated Regulation (EU) 2015/2205, Commission Delegated Regulation (EU) 2016/592 and Commission Delegated Regulation (EU) 2016/1178.
It also stems from the application of the EMIR clearing obligation to intragroup transactions after 21 December 2020 and the demanding conditions faced by market participants in relation to the COVID-19 crisis.
Click here to read the full letter.
taken to ensure that EU derivatives counterparties can rely on the intragroup exemption from clearing under the European Market Infrastructure Regulation (EMIR) when dealing with non-EU affiliates.
Alongside ISDA, the European Banking Federation (EBF) and the Futures Industry Association (FIA) have also shown their support.
The letter was addressed to Steven Maijoor, chair of ESMA, and was sent by Scott O'Malia, CEO of ISDA, Wim Mijs, CEO of EBF, and Walt Lukken, president and CEO of FIA.
The associations did, however, emphasise the continued importance of intragroup transactions both for the ability of EU financial groups to operate, compete and make capital available in non-EU jurisdictions, and to manage risks on a centralised basis therein.
According to the associations, intragroup transactions are also vital to enable non-EU financial groups to provide the capital needed to underpin investment within the EU-27 and to manage risk associated with this activity.
In view of the forthcoming expiry in December 2020 of the intragroup exemption from the clearing obligation under EMIR, the associations requested that the necessary equivalence decisions be adopted as a matter of urgency in relation to all jurisdictions that have implemented clearing rules in line with the G20 commitments.
Secondly, the associations requested that the clearing regulatory technical standards should be amended to extend the current temporary derogation from clearing requirements for intragroup transactions with non-EU affiliates for a further three years for all other jurisdictions.
These steps would be taken as soon as possible during H1 2020, the associations highlighted, in order to prevent market participants from having to initiate and execute costly operational, legal and contractual compliance processes, while also dealing with the uncertainty.
This uncertainty stems from the Commission Delegated Regulation (EU) 2015/2205, Commission Delegated Regulation (EU) 2016/592 and Commission Delegated Regulation (EU) 2016/1178.
It also stems from the application of the EMIR clearing obligation to intragroup transactions after 21 December 2020 and the demanding conditions faced by market participants in relation to the COVID-19 crisis.
Click here to read the full letter.
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