EUROPEAN UNION: The European Securities and Markets Authority (ESMA) Publishes Consultation Paper on the Clearing Obligation no.1.

Monday July 21 2014

The European Securities and Markets Authority (ESMA) invites responses to the specific questions listed in the consultation paper on the clearing obligation no.1.

This consultation paper seeks stakeholders’ views on the regulatory technical standards that ESMA is required to draft under Article 5(2) “Clearing Obligation Procedure” of the Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories (EMIR).

This paper provides explanations on the draft regulatory technical standards establishing a clearing obligation on certain interest rate OTC derivative classes.

Section 1 provides an overview of the clearing obligation procedure and the classes of OTC derivatives that are relevant for this consultation paper.

Section 2 provides clarifications on the structure of the classes of OTC derivatives that are proposed for the clearing obligation and addresses the specific nature of covered bond derivatives as well as the functioning of the public register for the clearing obligation.

Section 3 includes the determination of the interest rate classes of OTC derivatives that should be subject to mandatory clearing with an analysis of the relevant criteria.

Section 4 presents the approach for the definition of the categories of counterparties, and the proposals related to the dates from which the clearing obligation should apply per category of counterparty. Section 5 provides explanations on the approach considered for frontloading and the definition of the minimum remaining maturities of the contracts subject to it.

Finally, Sections 6 and 7 give an analysis of some OTC derivatives classes that ESMA is proposing not to submit to mandatory clearing at this stage.

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