The European Securities and Markets Authority (ESMA) has published a statement given by its chairman, Steven Maijoor, to the European Parliament’s Economic & Monetary Affairs Committee (ECON). The statement concerns the draft Regulation on the recovery and resolution of central counterparties (CCPs).

At the beginning of his statement Mr Maijoor expresses his appreciation for the key role that the draft Regulation assigns to ESMA. However, he expresses his disagreement with the conclusion in the proposal that the tasks assigned to ESMA have no resource implications.

Mr Maijoor then turns to three key aspects of the draft Regulation:

  • recovery planning – Mr Maijoor underlines the primary responsibility of central counterparties (CCPs) to develop an enforceable and comprehensive recovery plan under the supervision of their competent authorities and the CCP college. He adds that in his view the draft Regulation could benefit from a more detailed technical outline, in particular in view of facilitating supervisory convergence with the EU and setting a benchmark for third country CCPs;
  • resolution tools – Mr Maijoor accepts that there are some parallels with the Bank Recovery and Resolution Directive and the resulting synergies are worth exploring. However, he also warns that the underlying characteristics of financial market infrastructure providers are very different from banks and investment firms and that each resolution tool should be considered in that specific context; and
  • governance of the resolution process – Mr Maijoor refers to ESMA’s practical experiences with colleges operating under the European Market Infrastructure Regulation (EMIR). Specifically, so far ESMA has never been requested to launch a mediation process with respect to an EMIR college’s opinion. The main reason for that is the requirement that a majority of 2/3 of college members need to express their support to refer a proposed decision to ESMA for mediation, which has proven to be very rare. The larger composition of a resolution college compared to a CCP college would make it even more difficult to reach such a majority. Mr Maijoor states that this issue should be kept in mind when negotiating the relevant provision in the draft Regulation which currently stipulates that each member of the college can refer a proposed decision to ESMA for mediation. Mr Maijoor’s personal view is that it is appropriate to lower the hurdle for mediation in resolution when compared to the arrangements under EMIR.

View ESMA Chair statement on proposed Regulation on CCP recovery and resolution, 22 March 2017

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