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ESMA Consults on Draft RTS under ELTIF Regulation
On July 31, the European Securities and Markets Authority (ESMA) published a consultation paper on draft regulatory technical standards (RTS) under the Regulation on European Long-Term Investment Funds (ELTIF Regulation).
In accordance with the ELTIF Regulation, ESMA is consulting on draft RTS to determine the criteria for establishing the following:
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Circumstances in which the use of financial derivative instruments solely serves hedging purposes.
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Circumstances in which the life of an ELTIF is considered sufficient in length.
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Criteria to be used for certain elements of the itemised schedule for the orderly disposal of the ELTIF assets.
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Costs disclosure.
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Facilities available to retail investors.
The deadline for responses to the consultation is October 14, 2015.
EBA Releases Key Information on EU G-SIIs
On July 28, the European Banking Authority (EBA) published a chart setting out the key metrics used to identify global systemically important institutions (G-SIIs) in the EU. The chart contains information on the size, interconnectedness, substitutability, complexity and cross-jurisdictional activity of the 37 EU institutions whose leverage ratio exposure measure exceeded EUR 200 billion in 2014. Under the CRD IV Directive, additional capital buffers apply to firms that are systemically important. Identification of G-SIIs is the responsibility of national competent authorities and took place for the first time in January 2015.
ESRB Reports on EMIR
The European Systemic Risk Board (ESRB) has published two reports relating to EMIR (the Regulation on OTC derivative transactions, central counterparties and trade repositories) to assist the European Commission in fulfilling its obligation under Article 85 of EMIR to review and provide a report on the Regulation.
1. Margining Requirements
The ESRB explains in its report that although Article 85 of EMIR refers specifically to margining requirements, given the significant economic features in common between margins and the determination of haircuts, the report also considers haircut requirements and focuses on margins and haircut settings for central counterparties (CCPs), as the regulatory technical standards on bilateral margin requirements have not yet been endorsed. The ESRB proposes a further review of EMIR in 2018, specifically on the use of margining and haircuts to address and prevent systemic risks.
2. Issues to be considered other than efficiency of margining requirements
In its second report, the ESRB recommends that the Commission considers the following additional topics when preparing its report to the European Parliament and Council of the EU:
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A swift process for the removal or suspension of mandatory clearing obligations.
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The evaluation of systemic risks for mandatory clearing purposes.
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Replenishment of default funds and the skin-in-the-game design.
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Transparency requirements consistent with guidance developed at the international level.
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Publication of a list of approved interoperability arrangements by the European Securities and Markets Authority (ESMA).
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Access to trade repository data.
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