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EU Publishes ECB Opinion on EMIR Technical Standards

On 1 March 2013, the EU published an opinion of the European Central Bank (ECB), dated 27 November 2012, on the draft regulatory technical standards (RTS) and implementing technical standards (ITS) submitted under EMIR.

In general, the ECB was supportive of ESMA’s final draft technical standards but was keen to make sure that the focus on the standardisation of contractual terms in determining whether a product was eligible for mandatory clearing would not provide incentives for market participants to refrain from the process of contractual standardisation simply in order to avoid the requirement to clear.

The ECB also suggested a number of amendments to the text of the EMIR, the RTS and the ITS. Ultimately, the ECB’s suggested amendments were not adopted.  However, they do cast light on the concerns on the ECB and are indicative of possible future amendments.  To that extent, they are worthy of note.

EMIR Article 1(4)

Pursuant to Article 1(4) of EMIR, EMIR itself does not apply, inter alia, to members of the European System of Central Banks (ESCB).  The ECB was of the opinion that, in order to protect the books of members of the ESCB and so as not to signal their actions to the market in general, the counterparties to transactions of ESBC Members should also not be subject to the provisions of EMIR.

Draft RTS on the minimum details of data to be reported to trade repositories

The ECB suggested that a new section on credit derivatives be inserted in Table 2 of the Annex to the RTS.  This would indicate the type of restructuring clause (“Old”, “Modified”, “Modified Modified” or “No Restructuring”) underlying each CDS trade (unless a Unique Product Identifier had been reported which already contained this information).  The ECB also suggested supplementing this amendment by inserting a new section on credit derivatives into the draft ITS on the format and frequency of trade reports to trade repositories.

Draft RTS on data to be published and made available by trade repositories

The ECB suggested amending Article 2(10) of the RTS such that a trade repository would be obliged to provide ESCB member with access to transaction level data as well as position data for derivatives contracts.

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