The European Securities and Markets Authority (ESMA) has published a letter it sent to the European Commission regarding two sets of regulatory technical standards (RTS) on indirect clearing for over-the-counter (OTC) derivatives and for exchange-traded derivatives.
ESMA is empowered to develop these RTS under both the European Markets Infrastructure Regulation (EMIR) with regards to OTC derivatives, and the Markets in Financial Instruments Regulation (MiFIR) with regards to exchange-traded derivatives. Both RTS share the same objective of specifying the types of indirect contractual arrangements that do not increase counterparty risk and ensure that the assets and positions of the counterparty benefit from protection with equivalent effect as referred to in Articles 39 and 48 of EMIR.
The requirements related to OTC derivatives were set out in Commission Delegated Regulation (EU) No 149/2013 (EMIR RTS), whereas the requirements related to exchange-traded derivatives have been in development under the MiFIR mandate (draft MiFIR RTS).
In ESMA’s consultations on the draft MiFIR RTS, stakeholders raised a series of important concerns, which in ESMA’s view has made it necessary to develop alternative requirements for both OTC derivatives and exchange-traded derivatives than those requirements set in the EMIR RTS.
To ensure the smooth and orderly functioning of the markets, ESMA is of the opinion that amendments to the EMIR RTS need to be considered. It therefore intends to conduct a consultation on possible amendments to the EMIR RTS that would be consistent with the requirements as envisaged for the draft MiFIR RTS.
To ensure that the draft MiFIR RTS and EMIR RTS are consistent ESMA intends to submit them to the Commission at the same time. This is the reason why the draft MiFIR RTS have not been submitted with the rest of the MiFIR RTS.