The European Securities and Markets Authority has opened a consultation on its draft technical advice on commercial terms for providing clearing services under the European Market Infrastructure Regulation. Responses to the consultation should be submitted by December 2, 2019.
EMIR Refit introduced a new, and somewhat controversial, obligation for clearing members and clients to provide clearing services, whether they are provided directly or indirectly, under fair, reasonable, non-discriminatory and transparent (FRANDT principle) commercial terms. EMIR Refit has applied directly across the EU since June 17, 2019, however the FRANDT requirements will only apply from June 18, 2021. The Commission must adopt legislation setting out the conditions under which commercial terms are to be considered to be fair, reasonable, non-discriminatory and transparent, based on:
The Commission has asked ESMA to provide technical advice to assist it in developing the required legislation. ESMA intends to submit its report to the Commission in Q1 2020.
ESMA's consultation paper discusses the clearing obligation, incentives to clear, issues faced by some counterparties in gaining access to clearing services, the cost of clearing and the FRANDT principles. The paper then sets out ESMA's proposed requirements that a clearing service provider would need to comply with to satisfy the FRANDT principles.
View the consultation paper.
View details of EMIR Refit.
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