On 16 June 2022 the European Commission hosted a meeting of the Derivatives and Market Infrastructures Member States Working Group, which is an expert group composed of Member States’ representatives. The agenda for the meeting included consideration of possible legislative and non-legislative measures to be developed in the context of the European clearing strategy announced by Commissioner McGuiness in November 2021. As stated by the Commission, the strategy is intended to reduce European over-reliance on UK-based central counterparties (CCPs) for certain clearing activities by developing the capacity of EU-based CCPs.
In order to achieve these objectives, the Commission considers certain measures, which it presented for Member States’ consideration during the 16 June meeting. These can be summarised around the following four key streams:
- Initiatives targeting the demand of clearing services to foster clearing at EU CCPs: in this context, among other measures, the Commission considers a prospective introduction of a requirement for EU clearing participants to hold an active account with an EU CCP, setting out the large exposures framework for banks and investment firms concerning exposures to systemic qualifying CCPs (QCCPs), introducing a clearing obligation for certain public entities (alternatively a recommendation/requirement that public entities that clear voluntarily do so at EU CCPs), further facilitating clearing by clients and clarifying the application of hedge accounting rules.
- Measures targeting the supply of clearing services to increase the attractiveness of EU CCPs: the Commission considers prospective simplification of certain procedures under the European Markets Infrastructure Regulation (EMIR) (including CCPs’ interactions with their supervisors), central bank-related measures (such as granting all EU CCPs access to central bank deposit and liquidity facilities) and certain targeted issues concerning CCPs’ segregated default funds, investment policy and eligible collateral.
- Changes to the supervisory framework for EU CCPs: the Commission considers possible measures to review the supervisory framework for EU CCPs, focusing on elements to improve supervision with the aim at improving the overall attractiveness, competitiveness and capacity of EU CCPs. Based on the result of its targeted consultation on the review of the central clearing framework in the EU, the Commission considers two alternative options: supervision of all or certain EU CCPs at EU level or enhancement of EMIR 2.2 supervisory framework.
- Other issues to be considered in the context of the EMIR review: the Commission intends to steer discussion amongst Member States on certain issues identified in the course of the Commission’s targeted consultation on the review of the central clearing framework in the EU. This includes the prudential treatment of third-country CCPs, intragroup transactions (notably problems with adopting the relevant equivalence decisions and general complexities of the intragroup regime), clearing thresholds and the scope of CCP authorisation.
Publication of the Commission’s legislative and/or non-legislative proposal(s) is expected to take place by the end of the year.