In the paper Targeted consultation on the review of the central clearing framework in the EU from February 2022, one of the measures proposed for consideration by the European Commission (EC) was the requirement for an “active account” (ie the requirement to “maintain[…] an active account with an EU central counterparty (CCP) for the products that are available inside and outside the EU”). We understand that such a measure would require all, or a subset of, EU clearing participants to have an account at an EU CCP or a tier-1 CCP in addition to, or as an alternative to, an account at a tier-two third-country CCP.
We accept that having viable options is always good risk management, but note however that this is a tool that could, depending on how it is designed, add costs and risks for EU clearing participants (be they clearing members or clients).
As we understand that this proposal is under serious consideration by the EC, we provide analysis as to the potential consequences of different design choices.
We look at three policy options:
Policy Option 1: No active accounts
Policy Option 2: Active accounts without a target minimum level of activity
Policy Option 3: Active accounts with qualitative and quantitative usage requirements – minimum activity levels
For each policy option we analyze the impact on market participants and how the policy option could be operationalized and supervised.