On 21 January 2017 revised technical standards on reporting under the European Markets Infrastructure Regulation (EMIR) have been published, which will lead to significant changes in EMIR reporting.
Furthermore, the European Securities and Markets Authority (ESMA) has been lately busy with provision of clarification on application of various EU regulations.
In addition, the European Commission (EC) issued equivalence decisions related to a number of third country central counterparties (CCPs) and regulated markets, while BaFin published clarifications on exemptions from EMIR clearing and collateral obligations.
To read more about these and other regulatory developments affecting the derivatives and / or securities markets, please see the news items below.
On 21 January 2017 revised technical standards on reporting under the European Markets Infrastructure Regulation (EMIR) have been published in the Official Journal of the EU, amending the existing Delegated Regulation (EU) No. 148/2013 and Implementing Regulation (EU) No. 1247/2012.
As a result, EMIR reporting will go through significant changes. Some of the amendments merely move existing but non-binding Q&A guidance into binding regulations. However, the revised technical standards also introduce, inter alia, new reporting fields, changes to position reporting and collateral reporting as well as amendments to the frequency and format of trade reports.
The majority of the changes will apply as of 1 November 2017.
Commission Delegated Regulation
The European Securities and Markets Authority (ESMA) updated on 1 February 2017 its Questions and Answers (Q&A) on practical questions related to the European Markets Infrastructure Regulation (EMIR).
The update provides clarifications concerning transition to the revised technical standards on EMIR reporting.
The European Securities and Markets Authority (ESMA) published on 19 December 2016 new Questions and Answers (Q&A) on commodity derivatives topics under the revised Markets in Financial Instruments Directive and Regulation (MiFID II and MiFIR).
The Q&A clarify issues related to (i) the position limits, and (ii) ancillary activities requirements. As regards the position limits, ESMA, inter alia, provides for (i) a definition of “lot” for energy products and economically equivalent OTC contracts, and (ii) clarifies the difference between commodity derivatives and exchange traded commodities.
On ancillary activities, ESMA, inter alia, provides clarification on (i) whether all legal entities dealing in commodity derivatives within one financial group require an individual authorization as an investment firm, and (ii) how C6 financial instruments shall be counted in case of calculation of the size of ancillary activities.
ESMA’s Q&A on MiFID II and MiFIR commodity derivatives topics
The European Securities and Markets Authority (ESMA) updated on 31 January 2017 its Questions and Answers (Q&A) on transparency topics under the Markets in Financial Instruments Directive (MiFID II).
The Q&A on transparency topics address, inter alia, on which level the systematic internaliser threshold shall be calculated for derivatives.
On 27 January 2017 the European Securities and Markets Authority (ESMA) sent a letter to the European Commission (EC) with respect to the review of the European Markets Infrastructure Regulation (EMIR) performed in November 2016 (see our previous Newsletter).
ESMA pointed out specific measures to ensure effective supervision: (i) strengthening of sanctioning powers and the level of fines for trade repositories (TRs), (ii) enhancement of its existing supervisory tools towards TRs, (iii) inclusion of additional requirements for TRs related to data quality and data access, and (iv) specification of reporting requirements.
Furthermore, ESMA suggested the following essential aspects to be taken into account in the context of the EMIR review: (i) amendment to the clearing obligation framework and review of the language setting the default management requirements and protections, (ii) redefinition and recalibration of the categories of large and small non-financial counterparties and the related sets of obligations, (iii) enhancement of transparency and predictability of margin requirements, and (iv) reconsideration of the third-country central counterparty (CCP) recognition framework to ensure a timely and risk based process.
Apart from that, ESMA advised the European Commission on the topics related to the Credit Rating Agencies Regulation (CRAR) as well as its enforcement and sanctioning powers in the credit rating industry.
The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) published clarifications on the European Markets Infrastructure Regulation (EMIR) with regard to (a) the exemption from the clearing obligation, and (b) the exemption from the collateral obligation, in case of intra-group transactions.
In particular, BaFin sets out a list of requirements to be fulfilled by the counterparties if they intend to qualify for the respective exemptions.
BaFin on the clearing obligation exemption under EMIR
The European Securities and Markets Authority (ESMA) published on 31 January 2017 a consultation paper on future guidelines on the transfer of data between trade repositories (TRs) authorised in the EU under the European Markets Infrastructure Regulation (EMIR).
The proposed guidelines aim to ensure (i) the competitiveness of the TR environment, (ii) the quality of data available to authorities, including the aggregations carried out by TRs, and (iii) a consistent and harmonised way to transfer records from one TR to another.
ESMA will consider all comments received by 31 March 2017.
Consultation Paper on ESMA’s Guidelines on transfer of data between TRs
The European Commission recognised equivalent central counterparties (CCPs) and regulated markets (exchanges) established in the following third countries: India, Singapore, Japan, Australia, Canada, New Zealand, Brazil and the United Arab Emirates.
Respective Implementing Decisions of the European Commission were published on 15 December 2016 in the Official Journal of the EU.
On 15 December 2016 the European Securities and Markets Authority (ESMA) started a public consultation on the extension of data to be made available to the public by trade repositories (TRs) as envisaged in the European Markets Infrastructure Regulation (EMIR).
The consultation paper focuses on the aggregate position data to be made publicly available by the TRs and specifies the relevant operational standards to compare and aggregate this type of data across different TRs.
In particular, stakeholders were asked to comment on ESMA’s proposals related to (i) the avoidance of double counting of cleared derivatives, (ii) data aggregations for commodity derivatives and derivatives using benchmarks, as well as (iii) general technical aspects for publication of aggregate data.
The consultation is open until 15 February 2017.
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