On 29 August 2023, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) held a debate on the European Commission’s (Commission) proposal amending the European Market Infrastructure Regulation (Regulation (EU) 648/2012) (EMIR) as part of the clearing review.
The clearing review proposals were adopted and published by the Commission in December 2022 with the aim of increasing the competitiveness of the EU central clearing framework as well as the share of instruments that are cleared at an EU central counterparty (CCP). The most controversial aspect of the legislative proposal is the proposed introduction of an obligation for financial and non-financial counterparties subject to the clearing obligation to have, directly or indirectly, an active account with an EU CCP and clear at least a proportion of trades in certain instruments in the said EU CCP. In addition, the Commission proposed a number of amendments to the clearing obligation, the exemption for intragroup transactions and risk mitigation measures. Finally, the Commission proposed to centralise supervision of CCPs at the EU level, making the European Securities and Markets Authority (ESMA) the sole supervisor for EU CCPs.
The members of the ECON filed a total of 538 amendments to Commission’s proposal.
European Parliament rapporteur Danuta Huebner (PL) from the European People’s Party started the discussion by pointing out the importance and relevance of the clearing review proposal. In her view, the review represents an opportunity to look at the EU clearing landscape in a global context. For Huebner, the EU clearing framework should contribute to deep liquidity and attractive capital markets. With regard to the proposed active account requirement, Huebner opposes the introduction of quantitative thresholds as she considers these to be arbitrary. However, she supports a phased approach, as proposed in her draft report, which would, in a first phase, require counterparties to exchange initial and variation margin with CCPs established in the EU and regularly enter into new positions with these CCPs. Following a review by ESMA, a second phase could lead to the introduction of a quantitative threshold should this be considered necessary.
With regard to supervision, Huebner sees nearly unanimous support from her colleagues on the proposal to move EU CCP supervision to ESMA, a view she shares. On the amendments targeted at the supply side, Huebner sees a shared commitment among ECON members to streamline the rules on approving new products and services offered by EU CCPs. Several amendments seek to provide more clarity on the margin models supplied by EU CCPs as well as more transparency for EU CCP clients. Finally, Huebner stated that the proposed measures related to energy prices and related derivatives need further discussion.
Shadow rapporteur for the social democrats Aurore Lalucq (FR) stated that her political grouping supports the Commission’s goal to bring more clearing to the EU and thinks that this can be achieved by introducing the active account requirement. The shadow rapporteur considers the Commission proposal to have been already a compromise, which was supported by eighty-five percent of the stakeholders responding to the public consultation on the clearing review. Lalucq therefore supports the introduction of a quantitative threshold within the active account requirement, but she cannot support the two-phased approach that was proposed by Huebner. The group does, however, support the Commission proposal bringing EU CCP supervision within the remit of ESMA.
Green shadow rapporteur Claude Gruffat (FR) also supports ESMA supervising EU CCPs. In line with Lalucq, Gruffat is in favour of introducing a quantitative threshold within the active account requirement. In addition, Gruffat stated that his group wants to introduce a penalties framework for counterparties that breach the threshold. In the context of the energy price crisis in 2022, Gruffat asks for the introduction of more stringent reporting requirements for non-financial counterparties under EMIR.
The last speaker of the ECON was the conservative shadow rapporteur Dorien Rookmaker (NL). Rookmaker focused her intervention on the need for more competitiveness in the EU. In her view, the introduction of an active account requirement would prevent the EU clearing market from becoming more competitive vis-à-vis third countries, as the requirement would not introduce an incentive for CCPs to provide better services and lower clearing costs. Rookmaker hopes that ESMA’s supervision of EU CCPs can reduce supervision costs.
Following the debate, Commission representative Jennifer Robertson (DG FISMA) welcomed the discussions on the active accounts requirement and signalled that the Commission could accept the phased approach proposed by rapporteur Huebner. Responding to the concerns raised by Rookmaker with regard to competitiveness Robertson stated that the fourteen CCPs active in the EU will generate competition among each other.
The ECON rapporteur will organise further meetings with the shadow rapporteurs to articulate compromise amendments to the Commission’s proposal. The next closed-door shadow meeting is scheduled for Thursday 7 September 2023. A vote in the ECON on the draft report is scheduled for 7 November 2023. Meanwhile, the Council is continuing its discussions on EU Member States’ position on the proposal. The Spanish Presidency of the Council has the ambition to adopt a common position before the end of 2024. Should this succeed, then trilogue negotiations between the European Parliament, Council and Commission could start in mid-December 2023 at the earliest.