On August 29, the European Systemic Risk Board (ESRB) published advice to the European Securities and Markets Authority (ESMA) on the following two aspects of the draft regulatory technical standards (RTS) to be implemented pursuant to EMIR. Advice 1. Advice 2.

Use of over-the-counter (OTC) derivatives by non-financial counterparties

• Legislators may wish to ensure that all corporations exposed to derivative activities at a given proportion of their overall balance sheet are treated equally, whatever their size.
• The total amount of derivatives held by a non-financial corporation, irrespective of their intended use, should be appropriately reflected in the calculation of the clearing threshold.

Eligibility of collateral for central counterparties (CCPs)

• Type of collateral used – CCPs should only accept securities that are listed and publicly traded.
• The haircuts to apply to collateral – haircut practices should be designed in a way that minimises sudden and large increases in times of market stress.

Conditions under which commercial bank guarantees may be accepted as collateral – commercial bank guarantees should be subject to a limited use and lower concentration ratio than the one applicable to other eligible collateral.