On 3 October 2019, the European and Securities Markets Authority (ESMA) published a consultation paper on draft technical advice to the European Commission (Commission) on the commercial terms for providing clearing services under the Regulation on over-the-counter derivative transactions, central counterparties and trade repositories (EMIR).
The adoption of the EMIR Refit Regulation in May 2019 imposes a new obligation on clearing members and clients that provide clearing services, through the insertion of a new Article 4(3a) into EMIR, to provide their services under fair, reasonable, non-discriminatory and transparent (FRANDT) terms. The specification of these terms is to be adopted in a delegated Act by the Commission before the requirements start to apply on 18 July 2021.
The consultation paper sets out the requirements for FRANDT commercial terms, based on the four criteria listed under Article 4(3a) of EMIR, namely:
- fairness and transparency;
- unbiased and rational contractual arrangements;
- to facilitate clearing services and prices to be fair and non-discriminatory; and
- risk control criteria.
The deadline for comments to the consultation paper is 2 December 2019. ESMA will consider the responses received and expects to publish a final report and to submit its technical advice to the Commission by Q1 2020.