Following a meeting of the European Parliament's Economics and Monetary Affairs Committee (ECON) yesterday, MEP Werner Langen, rapporteur for the European markets and infrastructure regulation (EMIR), will table a paper that will whittle down some of the 975 amendments tabled by MEPs to the original proposals.
The European Commission released initial proposals for EMIR on 15 September. Langen, who presented his own report to ECON on 28 February, has to find a middle ground on the controversial issues in the proposed text. However these can only be made where there is room for movement; the more black and white points, such as whether or not EMIR should only apply to over-the-counter (OTC) derivatives, will have to be voted on.
EMIR was originally intended to provide the rules for central clearing and risk mitigation of OTC derivatives. It also includes requirements for central counterparties, post-trade interoperability, reporting obligations and requirements for trade repositories.
ECON's vote on EMIR has been delayed by the sheer weight of the amendments proposed and the subsequent discussion of them. The vote will now take place on 24 May, having previously been expected on 20 April, and the European Parliament's plenary vote, which ECON's decision will guide, is now expected in June.
The key points under discussion in EMIR are the degree to which interoperability should be allowed between CCPs without further review, whether or not clearing for OTC derivatives should be introduced retroactively, and what exemptions there might be for clearing.
The Working Party on Financial Services, which is responsible for preparing material on financial market issues, before it is addressed by the Committee of Permanent Representatives prior to a vote by the Council at the Council of the European Union, also met on Wednesday 20 April to discuss amendments made by the Hungarian Presidency of the Council to the EC proposal. These changes include the extension of clearing obligations to “all (…) derivative contracts, pertaining to a class of derivatives declared subject to the clearing obligation”.
Once the Council of the European Union and the European Parliament have voted on the amended proposal, any differences between the two groups will have to be reconciled before legislation is drawn up.
Meanwhile in the US, deputy treasury secretary Neal Wolin has warned that critics of the Dodd-Frank Act have engaged in attacks on the law and its implementation.
“Let me be clear: we are not working to undermine Dodd-Frank. It is the law, and we are working diligently to provide regulators with the expertise and knowledge of those in the industry to get right the hundreds of new rules that are being written,” said Tim Ryan, president and CEO of US sell-side trade body SIFMA, in response. “Rushing to meet deadlines without proper thought, analysis and coordination amongst regulators will only result in a fragmented regulatory structure, regulatory arbitrage, and uncertainty in the market place.”
Ryan added that he was appreciative of the recent review by derivatives regulator the Commodity Futures Trading Commission (CFTC) on his concerns.
The CFTC will meet on 27 April to discuss capital requirements for swap dealers and major swap participants; protection of cleared swaps, customer contracts, collateral and related amendments to commodity broker bankruptcy provisions; product definitions contained in Title VII of the Dodd-Frank Act, which involves oversight of swaps and security-based swaps; and amendments to adapt certain CFTC regulations to the Act.
The CFTC is also working with the Securities and Exchange Commission to host a Dodd-Frank Act implementation roundtable on 2 May. This is intended to provide the public with an opportunity to comment on whether to phase implementation of the new requirements.