On 2 October 2023, the European Systemic Risk Board (ESRB) published its response to the European Securities and Markets Authority’s (ESMA) final report on extending emergency measures on central counterparty (CCP) collateral requirements.

On 14 October 2022, ESMA published a final report on emergency measures on collateral requirements. Previously, the European Commission asked ESMA to consider whether the applicable Level 2 provisions, in particular Commission Delegated Regulation (EU) 153/2013, supplementing the European Market Infrastructure Regulation (EMIR) with regards to requirements for CCPs, should be temporarily adapted to alleviate some of the burden faced by non-financial counterparties (NFCs), while keeping the overarching goal of EMIR of preserving financial stability. ESMA responded to the Commission’s letter by outlining proposals intended to smoothen the functioning of the EU’s financial and energy markets and alleviate the liquidity pressure on NFCs active on gas and electricity regulated markets cleared in EU-based CCPs. The final report followed up on ESMA’s response by containing draft regulatory technical standards amending Delegated Regulation 153/2013, which temporarily expanded the pool of eligible collateral accepted by CCPs to include uncollateralised bank guarantees for NFCs acting as clearing members and public guarantees for all types of counterparties.

On 28 November 2022, there was published in the Official Journal of the European Union,  Commission Delegated Regulation (EU) 2022/2311 of 21 October 2022, amending the regulatory technical standards laid down in Delegated Regulation (EU) No 153/2013 as regards temporary emergency measures on collateral requirements.

In its response, the ESRB outlines the following:

  • The ESRB notes that, unless action is taken, the temporary expansion that it supported will expire on 29 November 2023.
  • ESMA’s report, on which the ESRB is required to be consulted under Article 46(3) EMIR, does not find any evidence that the temporary measures have created unmanageable risks for CCPs and the EU financial system, as the risk management safeguards of the CCP and all other applicable collateral requirements continue to apply.
  • The ESRB maintains its view communicated in its response of October 2022, including its belief that the emergency measures on CCP collateral requirements should be temporary.
  • Based on the findings of ESMA’s report, and in view of the potential increase in volatility in energy markets in the coming winter months and the ongoing negotiations to review the regulatory framework applicable to EU CCPs the ESRB is, however, agreeable to the extension period proposed by ESMA as it would reduce risks to financial stability.