On 2 June 2020, the European Securities and Markets Authority (ESMA) published a final report with technical advice to the European Commission on the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms for the provision of clearing services.

As part of a broader effort to facilitate access to clearing, the EMIR review (Refit), introduced the requirement for clearing members and clients who provide clearing services to do so under FRANDT terms by June 2021. The Commission is mandated to develop a delegated act to define the requirements for such FRANDT terms and tasked ESMA in June 2019 with producing technical advice on the FRANDT terms as input for the development of the delegated act.

The final report that ESMA has published sets out the FRANDT principles (section 3), the scope of the FRANDT principles (section 4), considerations on public disclosure and transparency (section 5), principles for on-boarding (section 6), how to consider how to further specify FRANDT in relation to risk assessments, fees, contract terms and technology (sections 7 to 10) and reflections on enforcement of FRANDT (section 11). The annexes in the final report contain the mandate for ESMA to develop the technical advice, the cost benefit analysis, the final technical advice and the advice of the Securities and Markets Stakeholder Group.

ESMA is providing its technical advice to the Commission. The Commission is empowered to adopt delegated acts in accordance with Article 82 of EMIR to supplement EMIR by specifying the conditions under which the commercial terms are to be considered to be fair, reasonable, non-discriminatory and transparent.