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ESMA Publishes Interoperability Guidelines

On 10 June 2013, ESMA published “Guidelines and Recommendations for establishing consistent, efficient and effective assessment of interoperability arrangements” pursuant to Article 54 of EMIR.

The guidelines are directed at national competent authorities (NCAs), defining the factors they should analyse in assessing interoperability arrangements in order to improve the rigor and uniformity of standards applied in this area.  To this extent, they will also assist CCPs in understanding what aspects of an interoperability arrangement to focus upon.

The guidelines and recommendations are split into five broad categories, addressing:

  • legal risk associated with an interoperability arrangement, including:
    • documentation of the arrangement; and
    • operational aspects;
  • open and fair access to interoperability arrangements, including:
    • documentation which ensures non-discriminatory access and avoids unduly restrictive termination provisions;
  • identification, monitoring and management of risks associated with interoperability arrangements, including:
    • the creation of general risk frameworks to identify, monitor, assess and mitigate risks arising from arrangement as well as to ensure continued compliance with EMIR and all other regulation;
    • the exchange of information;
    • default management;
    • termination;
    • risks associated with the operation of different risk-management frameworks between interoperating CCPs;
    • risk profile and membership criteria of interoperating CCPs; and
    • exposure management;
  • deposit of collateral in a way that is protected from the default of any interoperable CCP; and
  • cooperation between NCAs.

The Guidelines and Recommendations take effect from 10 June 2013.

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