The European Supervisory Authorities (ESAs) have published two joint consultations, to amend Regulatory Technical Standards (RTS) on the clearing obligation and risk mitigation techniques for over-the-counter (OTC) derivatives not cleared.
- Consultation paper on the clearing obligation:
This paper provides explanations on the draft regulatory technical standards specifying criteria for establishing which arrangements under covered bonds or securitisations adequately mitigate counterparty risk. The structure of this consultation paper contains an introduction on the clearing obligation, an overview of the objective and approach for the technical standards on the clearing obligation presented in the consultation paper, and clarifications on the conditions for the arrangements in relation to covered bonds and the arrangements in relation to securitisation that could enable to benefit from an exemption from the clearing obligation. The ESAs will finalise the draft RTS when the consultation period had ended, before they are submitted to the European Commission for endorsement in the form of a Commission Delegated Regulation. The ESAs will consider comments received by 15 June 2018.
- Consultation paper on risk mitigation techniques:
This paper aims at fulfilling the amended mandate of Article 11(15) EMIR, by extending the type of exemption currently associated with covered bonds, i.e. no exchange of Initial Margins and collection only of Variation Margins, to STS securitisations, under a set of conditions which are similar to the conditions required for covered bonds (i.e. that the OTC derivatives are used only for hedging purposes, and there are arrangements which adequately mitigate counterparty credit risk with respect to the OTC derivative contract). The draft RTS will be submitted to the Commission for endorsement by 18 July 2018, following which they will be subject to scrutiny by the European Parliament and the Council, before being published in the Official Journal of the European Union. The deadline for comments about the consultation is 15 June 2018.
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FCA EMIR update – intragroup exemptions