On 11 June 2021, the European Securities and Markets Authority (ESMA) issued a statement regarding the implementation of the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms to provide clearing services.

Key points in the statement include:

  • ESMA is aware that certain clearing members and clients are facing challenges when preparing for the 18 June 2021 deadline to provide clearing services in accordance with FRANDT commercial terms.
  • The European Commission has adopted a Delegated Regulation specifying the conditions under which the commercial terms are to be considered to be FRANDT on 2 June 2021. This Delegated Regulation is now subject to scrutiny by the European Parliament and Council.
  • Given that the scrutiny period is ongoing, it cannot be known when the Delegated Regulation will be finalised and start to apply but this will likely occur after 18 June 2021.
  • From a legal perspective, neither ESMA nor Member State competent authorities possess any formal power to dis-apply a directly applicable EU legal rule or delay the start of some of the related obligations.
  • ESMA expects Member State competent authorities not to prioritise their supervisory actions towards clearing members and clients expected to provide clearing services in accordance with FRANDT commercial terms before the date the Delegated Regulation will apply, and to generally carry out their risk-based supervisory powers in their day-to-day enforcement of applicable legislation in this area in a proportionate manner.

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