EFAMA, BFPI Ireland, EACB, FIA EPTA, Federation of the Dutch Pension Funds, Finance Denmark, Nordic Securities Association, AIMA, ICI Global, FIA and ISDA, which collectively represent major European end users of derivatives along with providers of clearing services, have published a joint statement on the European Commission’s (EC) proposed active account requirement under the European Market Infrastructure Regulation (EMIR 3.0).
The EC’s active account proposal would require all market participants to hold active accounts at EU central counterparties (CCPs) for clearing at least a portion of certain systemic derivatives contracts. The EMIR 3.0 proposals are currently being debated by co-legislators in the European Parliament and the Council of the European Union.
The associations urge EU policymakers to delete the proposed active account requirement and instead focus efforts on streamlining the supervisory framework for EU CCPs across member states while making EU CCPs’ offering for clearing in the EU more attractive and innovative. Incentivizing measures would provide a path to sustainable growth of EU CCPs while maintaining competitive and open markets.
The statement highlights the detrimental implications the proposed active account requirement would have on EU capital markets by introducing fragmentation, loss of netting benefits and making the EU less resilient to market stresses with no benefit to EU financial stability. This will ultimately harm European pensions savers and investors, the associations point out.
The statement also asserts that this requirement will create a competitive disadvantage for EU firms compared to third-country firms, which will remain able to transact in global markets without restrictions. EU clients that are required to clear at an EU CCP to comply with an active account threshold could be forced to accept an uncompetitive price wherever the price available at an EU CCP is higher than what is available at a Tier 2 CCP.
When making important decisions, such as imposing an active account requirement, policymakers should act prudently and be guided by comprehensive and robust cost-benefit assessments that include a review of the risks and impacts on financial stability and on the competitiveness of EU market participants. To date, such a comprehensive and robust cost-benefit assessment has not been produced.
Read the full statement here.
For Press Queries, Please Contact:
Christopher Faimali, ISDA, +44 20 3808 9736, CFaimali@isda.org
Kirsten Hyde, FIA, +44 20 7929 0081, fiapr@fia.org
Hayley McEwen, EFAMA, +32 2 548 26 52, Hayley.McEwen@efama.org
Melissa Barosy, ICI Global, +1 202 997 5787, melissa.barosy@ici.org
Stephen Bradford, ICI Global, +1 202-993-3760, stephen.bradford@ici.org
Luce Jacqmin, EACB, Luce.Jacqmin@eacb.coop
Documents (1) for Trade Associations Call for Deletion of Active Account Proposal
Latest
Recognition of Cross-product Netting is Critical
US regulators are in the process of making important changes to the regulatory capital framework by proposing modifications to the enhanced supplementary leverage ratio, which should help stop it from acting as a non-risk-sensitive constraint on bank capacity – a...
ISDA, GFXD Response to FCA on SI Regime
On September 10, ISDA and the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association responded to the Financial Conduct Authority's (FCA) consultation paper CP25/20 on the systematic internalizer (SI) regime for derivatives and bonds. ISDA and the...
ISDA, IIF Response to PRA on Market Risk Framework
On September 12, ISDA and the Institute of International Finance (IIF) submitted a joint response to the Prudential Regulation Authority’s (PRA) consultation on adjustments to the market risk capital framework (CP 17/25). ISDA and the IIF strongly believe the market...
ISDA Response on Clearing Costs
On September 8, ISDA responded to consultation by the European Securities and Markets Authority (ESMA) on a draft regulatory technical standard on clearing fees and associated costs (article 7c(4) of the European Market Infrastructure Regulation (EMIR)). In the response, ISDA...