ESMA has published four reports focused on how the EMIR framework has been functioning and providing recommendations to the European Commission’s (EC) EMIR Review.
Three of the reports are required under Article 85 of EMIR, and cover non-financial counterparties (NFCs), pro-cyclicality and the segregation and portability for CCPs. The fourth report responds to the EC’s Review including recommendations on amending EMIR in relation to the clearing obligation, the recognition of third country CCPs and the supervision and enforcement procedures for trade repositories.
The documents contain several controversial recommendations including
- Re-classification of “quasi-financials”;
- Assess systemic relevance of NFCs on basis of gross notional value per class regardless of hedge/non-hedge distinction;
- Amend the Article 39 EMIR regime on segregation and portability for client assets;
- Simplify the Clearing Obligation procedure and remove frontloading requirements;
- Abandon the requirement to backload reports for transactions terminated before 12 February 2014; and
- Overhaul the third country CCP equivalence procedure