Breakthrough for EU OTC derivatives regulation
The European market infrastructure regulation
(EMIR), a new regulatory framework for over-the-counter derivatives based on
criteria set by the G20, has been approved by the European Parliament and the
Council of the European Union.
The two bodies had been in disagreement over the
role of the European Securities and Markets Authority (ESMA) in resolving
disputes between national securities regulators on the authorisation of central
counterparties used to clear standardised OTC derivatives.
But after several rounds of ‘trialogue’ talks facilitated
by the European Commission, a text has been agreed that, according to the
Commission, retains the principle of “strong cooperation between all of the
public authorities concerned from all the member states involved” in the
authorisation process for individual CCP.
According to a text released by the Commission,
legitimate concerns by a national regulator or central bank over the
authorisation of a CCP can be addressed via a mechanism “that allows those authorities to raise their concerns and, if
necessary, to request ESMA to take a final decision using a procedure of
Single market commissioner Michel Barnier said
the agreement on the regulation was “a key step in our effort to establish a
safer and sounder regulatory framework” for Europe’s financial markets.
Barnier said: “The regulation ensures that
information on all European derivative transactions will be reported to trade
repositories and be accessible to supervisory authorities, including ESMA, to
give policy makers and supervisors a clear overview of what is going on in the
markets. The era of opacity and shady deals is over.”
The regulation will enable standarised
derivatives to be traded on exchange-like trading venues, cleared through CCPs
governed by strict organisational, business conduct and prudential requirements
and traded on central reporting repositories.
Following the agreement, the European Parliament will vote in plenary
session on the regulation and the Council will formally adopt the rules. ESMA
has been set a deadline of June 2012 for drafting the technical standards
underpinning the regulation.
Barnier asserted that the European Union had now
fulfilled its G20 commitments in this field “on time”, calling on other
jurisdictions to take “appropriate steps”.