On 13 June 2022, the European Supervisory Authorities (ESAs) published a final report with draft regulatory technical standards (RTS) proposing to amend Commission Delegated Regulation (EU) 2016/2251 on bilateral margin requirements. The European Securities and Markets Authority has also published a final report with a new draft RTS proposing to amend accordingly the three Commission Delegated Regulations on the clearing obligation under the European Market Infrastructure Regulation (EMIR).
Commission Delegated Regulation (EU) 2016/2251, and the three Commission Delegated Regulations on the clearing obligation, originally introduced temporary exemptions for intragroup contracts with third-country group entities, to facilitate centralised risk management-procedures for groups.
The draft RTS propose extending the current temporary exemptions regime for intragroup contracts by three years. This will accommodate the ongoing assessment of third-country equivalence and allow for a review of the intragroup exemptions framework under the EMIR review.
Among other things, the ESAs are of the view that a review of the EMIR framework for intragroup exemptions for contracts with third countries, and its interaction with the Capital Requirements Regulation, would be desirable. They add that the changes to the intragroup regime in EMIR should be done in a manner that ensures that the risk management of EU currencies is done in the EEA, to prevent circumvention risk via certain booking practices, e.g. back to back trades to essentially maintain everything in a third-country. The ESAs add that changes to the intragroup regime should also ensure ruling out exemptions for intragroup contracts with group entities from certain jurisdictions, e.g. jurisdictions not meeting certain standards or subject to sanctions.
The ESAs have submitted the draft RTS to the European Commission for endorsement. Following this, they are then subject to non-objection by the European Parliament and the Council. The ESAs also note that approval of the draft RTS may take some time and therefore have stated that, from 1 July 2022 until the end of the approval process, they would expect Member State competent authorities not to prioritise their supervisory actions with respect to the related requirements applicable to intragroup transactions and to generally apply their risk based supervisory powers in their day-to-day supervision of applicable legislation in this area in a proportionate manner.