On 8 March 2016, the European Supervisory Authorities (ESAs) sent to the European Commission for endorsement final draft regulatory technical standards (RTS) on risk-mitigation techniques for over-the-counter derivative contracts not cleared by a central counterparty under article 11(15) of the Regulation on over-the-counter derivative transactions, central counterparties and trade repositories.
On 9 June 2016, the Commission notified the ESAs of a delay in the endorsement process providing an endorsement with amendments of the draft RTS on 28 July 2016.
The ESAs have now published an opinion addressed to the Commission expressing disagreement with the proposed amendments to the final draft RTS. In particular, the ESAs disagree with the Commission’s proposal to remove concentration limits on initial margins for pension schemes and emphasise that these are crucial for mitigating potential risks pension funds and their counterparties might be exposed to.
The ESAs believe that the introduction of the changes proposed by the Commission may lead to a different application of the provisions compared to their original text of the draft RTS and, therefore, advise amending them accordingly.