Technical Paper on Active Accounts

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.

We also would like to refer to our paper A Roadmap to Make European Clearing More Attractive for proposals on how to make clearing in the EU more attractive without disadvantaging EU firms.

ISDA AGM Studio: Scott O'Malia and Chris Edmonds

Christopher Edmonds, president, fixed income & data services, at Intercontinental Exchange, speaks with Scott O’Malia, ISDA CEO, about how market volatility, regulatory change and technological transformation are reshaping global markets. The discussion explores what recent volatility has meant for participation,...

ISDA AGM Studio: Bill Borden, Microsoft

Bill Borden, corporate vice president, worldwide financial services, at Microsoft, speaks with Mark New, ISDA’s co-head of digital transformation and senior counsel, about how artificial intelligence (AI) is shaping the future of financial markets and the key factors firms should...

ISDA AGM Studio: Heath Tarbert

Heath Tarbert, president of Circle, speaks with ISDA CEO Scott O’Malia about the primary applications of stablecoins in derivatives markets and how key legal considerations – including bankruptcy treatment and settlement finality – are being addressed as digital assets become...

ISDA AGM Studio: Yuval Rooz

Yuval Rooz, co-founder and CEO of Digital Asset, speaks with ISDA CEO Scott O’Malia about the growing momentum behind tokenization, the most compelling use cases for derivatives markets and the remaining hurdles that need to be addressed to enable widespread...