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European regulation update: Central Securities Depository regulation (CSDR) and European Market Infrastructure regulation (EMIR)
European regulation update: Central Securities Depository regulation (CSDR) and European Market Infrastructure regulation (EMIR)

European regulation update: Central Securities Depository regulation (CSDR) and European Market Infrastructure regulation (EMIR)


Focus on the latest European regulatory developments on CSD and EMIR as of June 2018

Central Securities Depository regulation (CSDR)

The European Securities and Markets Authority (ESMA) published updated Q&As (23 March). The document has been updated to include new answers relating to:

  • The authorisation and supervision of CSDs
  • Conduct of business rules
  • Requirements for CSD links

ESMA published official translations of guidelines (28 March). ESMA has published:

  • (i) Guidelines on the process to determine the most relevant currencies in which settlement takes place
  • (ii) Guidelines on the process to determine the substantial importance of a CSD for a host Member State
  • (iii) Guidelines on cooperation between authorities.

The National Competent Authorities (NCAs) to which guidelines (i) and (ii) apply must notify ESMA whether they comply or intend to comply by 12 April 2018. NCAs to which guidelines (iii) apply must notify ESMA by 29 May 2018. All of the guidelines apply from 29 May 2018.

The European Commission (EC) released highly anticipated regulatory technical standards (RTS) on settlement discipline (25 May). The CSDR settlement discipline package is due to come into force 24 months after the technical standards are published in the Official Journal.

European Market Infrastructure regulation (EMIR)

ESMA updated validation rules (Article 9 of EMIR) (1 March). The validation rules for reports submitted under the revised technical standards:

  • Allow for the reporting of exchange-traded derivatives in products for which the effective date may be earlier than the date of execution
  • Clarify how the identification of the product should be validated in the reports submitted on or after 3 January 2018

The European Supervisory Authorities (ESAs) consulted on amendments to the Regulatory Technical Standards (RTS) on clearing obligation and risk mitigation techniques for uncleared derivatives (4 May). The draft RTS on the clearing obligation clarifies which arrangements under covered bonds or securitisations adequately mitigate counterparty risks and may benefit from an exemption from the clearing obligation. The draft RTS on risk mitigation techniques extends the type of special treatment currently associated with covered bonds to STS securitisations.

The Committee on Economic and Monetary Affairs (ECON Committee) adopted reports on REFIT and CCP supervision proposals (16 May). The proposals, for a regulation as regards the clearing obligation, reporting requirements, risk-mitigation techniques for OTC derivatives contracts not cleared by a Central Counterparty (CCP), and the supervision of Trade Repositories (TRs) (EMIR REFIT) and for a regulation as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (EMIR 2.2), will now be negotiated by the European Parliament, the Council and EC once Member States have agreed on their common stance.

ECON Committee published a report on the REFIT proposal (25 May). The EU Parliament's ECON Committee has published its report on the proposal for a regulation amending EMIR regarding the clearing obligation, reporting requirements, risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, and the supervision of trade repositories (EMIR REFIT). The Parliament is scheduled to consider the proposal at its plenary session on 11 June 2018.

Other European regulatory initiatives

European Long-Term Investment Fund (ELTIF) regulation: RTS on financial derivative instruments was published on 23 March. Commission Delegated Regulation (EU) 2018/480 with regard to RTS on financial derivative instruments solely serving hedging purposes, sufficient length for the life of the European long-term investment funds, assessment criteria for the market for potential buyers and valuation of the assets to be divested, and the types and characteristics of the facilities available to retail investors has been published in the Official Journal. The RTS entered into force on 12 April 2018.

ESMA consults on securitisation repositories (23 March). ESMA has published two consultation papers on securitisation repositories under the Securitisation Regulation. The first sets out draft technical standards on application requirements for registration with ESMA as a securitisation repository. The second consultation covers ESMA's proposed technical advice to the EC on the fees payable to ESMA for securitisation repositories.

Money Market Funds (MMFs) regulation: The EC adopted a delegated regulation (10 April) on simple, transparent and standardised (STS) securitisations and asset-backed commercial papers, requirements for assets received as part of reverse repurchase agreements and credit quality assessment methodologies. The Delegated Regulation aims to ensure that MMFs are invested in appropriate eligible assets by setting out MMF investment requirements and providing an overview of and single point of access to them. The Delegated will apply from 21 July 2018, except for Article 1 which will apply from 1 January 2019.

ESMA updated Q&As on benchmarks regulation (24 May). The Q&A includes one new answer on how prospectuses should include reference to the register of administrators and benchmarks. The document is intended to be a practical convergence tool to promote common supervisory approaches and practices in the application of the benchmarks regulation.

Undertakings for Collective Investment in Transferable Securities (UCITS): ESMA has updated its Q&As (25 May) on the application of UCITS. The Q&A document includes one new question and answer on the application of disclosure requirements on remuneration to delegates.

Read more

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EMIR - regulation memo

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