ISDA Responds to EU Commission on Euro Clearing Review


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On February 8, the European Commission (EC) consulted on the review of the central clearing framework in the EU.

ISDA welcomes the opportunity to thank the Commission for the dialogue-based approach it has taken so far on the topic of the central clearing framework in the EU and also the Commission’s open-mindedness and willingness to listen to and consider industry concerns in their decision making. ISDA encourages the EC to continue along this path and stands ready to discuss these issues with the Commission.

ISDA members do not agree with the Commission’s assessment that the use of tier-two central counterparties (CCPs), including those located in the UK, is a source of unmitigated financial stability risk for the EU, given that the European Market Infrastructure Regulation (EMIR) and EMIR 2.2 are sufficiently robust to ensure safe clearing. In this light, we believe that any measures that force clearing participants (clearing members and their clients) to use certain CCPs will be damaging to the overall derivatives market including the Capital Markets Union, clearing participants and end users, especially those in the EU.

Clearing participants should be free to choose where to clear, based on commercial and risk considerations. EU markets will be the most attractive to investors and market participants where they are open, innovative, dynamic and responsive. It is important that EU derivatives regulation acknowledges the global nature of the derivatives market and seeks to foster open markets with international jurisdictions based on the key principles of deference, as well as supervisory and regulatory cooperation.

We welcome that the Commission has identified positive measures in its consultation paper, that would make clearing in the EU truly more attractive. We ask the Commission to focus on these measures.

We propose that the Commission should consider a wider review how financial regulation in the EU could be aligned and streamlined, for instance in the areas of the Markets in Financial Instruments Directive, the directive on undertakings for collective investments in transferable securities and the link between recognition and the qualifying status in the Capital Requirements Regulation.

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