On 18 December 2014, the European Commission (the Commission) published a letter notifying the European Securities and Markets Authority (ESMA) that it was going to endorse, with amendments, the draft regulatory technical standards (RTS) on the clearing obligation on interest rate swaps. Within six weeks from the Commission’s notification, ESMA may amend the draft RTS and resubmit it in the form of a formal opinion to the Commission.

ESMA has now published a formal opinion containing a second version of the draft RTS which addresses a number of changes introduced by the Commission. In particular ESMA:

  • agrees with the ultimate objectives of the modifications that the Commission intends to introduce;
  • supports the Commission’s intention to extend the initial approach with the objective of postponing the start date of the frontloading obligation, as this should provide counterparties with sufficient time to determine whether their contracts are subject to the frontloading obligation;
  • raises some concerns on the process envisaged to exempt non-EU intragroup transactions from the clearing obligation; and
  • proposes to incorporate the suggestion of the Commission to deal with the application of the 8 billion threshold to investment funds for the definitions of types of counterparties as a specific provision in the text of the RTS.

View ESMA publishes opinion on draft RTS on the clearing obligation for interest rate swaps, 29 January 2015