ESMA seeks feedback on EMIR implementation

The European Securities and Markets Authority (ESMA) has begun detailing how it will clear OTC derivatives in a discussion paper published today.

Stakeholder feedback will be used to help ESMA define the regulatory technical standards (RTS) to implement provisions in the European markets infrastructure regulation (EMIR).

It considers the procedure for defining asset classes for centralised clearing, such as the characteristics of OTC derivatives classes subject to clearing obligations and the date from which these requirements will take effect.

The paper also gives an overview of the current readiness of derivatives asset classes in regard to clearing. Currently, every asset class that is cleared has at least two central counterparties (CCPs), though in the case of foreign exchange derivatives there is only one European CCP, LCH.Clearnet.

When judging which OTC derivatives should be centrally cleared, ESMA is planning to consider the standardisation, volume and liquidity of the contracts.

The discussion paper is open for feedback until 12 September and submissions will be used by ESMA to draft its RTS on clearing obligations. This draft will then be circulated in future public consultations for further feedback.