The European Securities and Markets Authority (ESMA) has published a speech by Steven Maijoor (ESMA Chair) entitled Clearing the way towards an OTC derivatives union.

At the beginning of his speech Mr Maijoor discusses some general ESMA developments noting that the European Supervisory Authority celebrates its 5th birthday in 2016 and that by then the bulk of creating the single rulebook resulting from the post-crisis regulatory reforms will have been completed. In line with its 2016-2020 strategy ESMA’s focus is shifting to implementation – it will allocate more resources to supervisory convergence activities and reduce them for single rulebook activities.

Mr Maijoor notes that these general developments reflect similar developments in the regulation and supervision of derivatives noting that ESMA’s EMIR rulemaking work is almost complete and the focus is now on ensuring consistent implementation.

Mr. Maijoor also notes that:

  • over the last few years ESMA has worked towards what may be called an “OTC derivatives union” which will achieve a high level of consistency across the EU, both in terms of regulation and supervision and provides a positive model for establishing an EU-wide capital markets union;
  • ESMA finalised its proposal on the clearing obligation for certain interest rate swaps denominated in EUR, GBP, USD and JPY. Following endorsement by the European Commission, the regulatory technical standards are now under scrutiny by the Council of the EU and the European Parliament, and could enter into force around the end of the year;
  • ESMA has consulted on the application of the clearing obligation to other types of derivatives. In particular, the rules proposing a clearing obligation for certain European index credit swaps are close to final and Mr Maijoor hopes that they can soon be submitted to the European Commission;
  • no major hiccups have occurred in terms of reporting flows and connections with trade repositories and regulators. Moreover ESMA has been able to make use of the reported data on many different fronts including, for example, for the assessment of the liquidity and volume of transactions for the clearing obligation under EMIR, for the calibration of transparency requirements under MiFIR, and for the analysis of the systemic relevance of non-financial counterparties for the related EMIR review report; and
  • ESMA is conducting a review of the reporting rules, with three main areas of focus: (i) clarifying the description and purpose of certain reportable fields; (ii) reviewing existing fields so that they are aligned to the reporting logic prescribed in the Q&A document or reflect specific ways of populating them; and (iii) introducing a number of new fields and values to reflect market practices of trading in specific derivative contracts or to accommodate specific regulatory requirements.

View Steven Maijoor gives ISDA keynote speech: Clearing the Way Towards an OTC Derivatives Union, 24 September 2015