On October 7, ISDA submitted a response to the European Securities and Markets Authority (ESMA) on the review of the second Markets in Financial Instruments Directive (MIFID II) product governance rules, which touched upon derivatives-related issues. ISDA encouraged ESMA to develop specific environmental, social and governance (ESG) classification guidelines for derivatives and structured products to allow financial institutions to implement MIFID ESG obligations without undue regulatory risks. In particular, the response singled out equity and debt derivatives as eligible to qualify into the MIFID ESG categories and explained that other types of derivatives would not be applicable to taxonomy assessments, albeit forming part of sustainable investment strategies. ISDA welcomed the possibility of using ‘equivalent data’ for missing official data and urged ESMA to detail the definition of equivalent data from external providers at the European level to avoid market fragmentation in Europe. The response also asked for a distinction to be made when determining the target markets for over-the-counter (OTC) derivatives between standardized OTC derivatives and ‘case-by-case’ derivatives, given that a clustering approach can be suitable for the former as opposed to the latter, which by their nature are bespoke products intended for a unique transaction.
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DRR Expanded to Cover Hong Kong's Revised Rules
ISDA has expanded its Digital Regulatory Reporting (DRR) solution to support revised derivatives reporting rules in Hong Kong, enabling in-scope firms to implement the changes cost-effectively and accurately. The amendments from the Hong Kong Monetary Authority (HKMA) and the Securities...
Joint Letter on Simplification of EU Taxonomy
On October 6, ISDA, the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), the European Association of Co-operative Banks (EACB) and the European Banking Federation (EBF) published a policy statement in support of...
Paper on Removal of SI Regime
On October 10, ISDA, the Association for Financial Markets in Europe (AFME) and the International Capital Market Association (ICMA) published a paper on the practical implications of the recent discontinuation of the systematic internalizer (SI) regime for derivatives, bonds and...
ISDA Analysis to ESMA on Reporting Costs
ISDA has submitted to the European Securities and Markets Authority (ESMA) an analysis of the costs of regulatory reporting, which proposes where savings can be made most effectively. This document supplements the recent response submitted by ISDA, the Association for...