The European Securities and Markets Authority (ESMA) has published a consultation paper on draft regulatory technical standards (RTS) for the clearing of foreign exchange non-deliverable forwards.

The consultation paper is ESMA’s third consultation on the clearing obligation. It has been published following the delivery to the European Commission of ESMA’s final report on the clearing obligation for interest rate swap classes (IRS) and shortly after the end of the consultation period for the second clearing obligation paper on credit default swaps. It incorporates the feedback received to the first consultation paper on IRS only and is consistent with the final report on IRS.

The structure of the consultation paper is as follows:

  • section 1 provides an overview of the clearing obligation procedure;
  • section 2 provides clarifications on the structure of the class of foreign exchange non-deliverable forward over-the-counter derivatives that is proposed for the clearing obligation;
  • section 3 includes the determination of the class of over-the-counter derivatives that should be subject to mandatory clearing with an analysis of the relevant criteria;
  • section 4 presents the approach for the definition of the categories of counterparties, and the proposals related to the dates from which the clearing obligation should apply per category of counterparty; and
  • section 5 provides explanations on the approach considered for frontloading and the definition of the minimum remaining maturities of the contracts subject to it.

The deadline for comments on the consultation paper is 6 November 2014.

View ESMA consults on draft standards for the clearing of foreign exchange non-deliverable forwards, 1 October 2014