The European Securities and Markets Authority has published its annual report on the supervisory measures and penalties imposed by national regulators in respect of certain provisions under the European Markets Infrastructure Regulation. The relevant provisions govern: (i) the clearing obligation; (ii) the reporting obligation; (iii) non-financial counterparties; and (iv) the risk mitigation techniques under EMIR.

The key findings of the report include:

• Only 14 of the 28 countries that responded have NFC+s and within that group, France and the U.K. have ten or more NFC+s;
• The supervision and enforcement of EMIR varies between countries, with some countries allocating supervisory and enforcement powers to a single authority and others splitting the competences;
• The vast majority of national regulators interact with market participants, using methods such as feedback processes, webpage updates and working groups;
• Certain countries (including the U.K.) identified barriers to accessing clearing, especially for small financial counterparties;
• All countries subject to EMIR follow a risk-based supervisory approach to assessing risk mitigation techniques, together with spontaneous checks or periodic controls;
• There are three main supervisory and enforcement competences found amongst the majority of national regulators – imposing administrative fines, issuing binding letters, and issuing non-binding letters or recommendations; and
• No new penalties or sanctions were imposed during the period covered by the report, but the main sanctions and penalties envisaged may be imposed in a variety of ways, including quantifying fines up to a maximum amount, within a range or as a fixed amount plus a variable made up of a percentage of the annual turnover of the entity in question.

The report identifies certain areas that are highly harmonized among the 31 EEA countries, including the supervisory tools available and the means by which national regulators interact with market participants, whereas the amounts of administrative fines and methods of quantifying them vary significantly between countries. ESMA also identifies supervisory challenges for national regulators, for instance on the supervision of non-financial counterparties in relation to the clearing obligation. It hopes that the report may assist in promoting understanding of these issues and help to identify best practices.

View ESMA's Report.

[View source.]