European Securities and Markets Authority
Commission Delegated Regulation (EU) 2021/822 as regards the annual supervisory fees charged by the European Securities and Markets Authority to trade repositories published in the Official Journal - 25 May 2021
Commission Delegated Regulation (EU) 2021/822, amending Delegated Regulations (EU) 1003/2013 and (EU) 2019/360 in relation to the annual supervisory fees charged by the European Securities and Markets Authority (ESMA) to trade repositories for 2021, has been published in the Official Journal of the European Union.
Delegated Regulations (EU) 1003/2013 and (EU) 2019/360 set out the methodology for the payment of fees to ESMA by trade repositories for the purposes of Article 72(3) of the European Market Infrastructure Regulation (648/2012/EU) (EMIR) and Article 11(2) of the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR) respectively.
The amendments reflect the effect of two UK trade repositories transferring part of their services and activities to the EU to be able to continue providing services to EU counterparties. As the new EU trade repositories effectively started their EU activity in January 2021, their 2020 EU activity was minimal and their 2021 annual supervisory fee would be small, albeit their 2021 EU activities are likely to be significant. The Delegated Regulation changes the reference period for the calculation of the application turnover of trade repositories from 2020 to January-June 2021. This ensures that the annual supervisory fees for 2021 for these trade repositories will be calculated on the basis of their applicable turnover during the first half of 2021.
The Delegated Regulation was adopted on 24 March 2021 and enters into force on 26 May 2021.
Commission Delegated Regulation (EU) 2021/822 amending Delegated Regulations (EU) 1003/2013 and (EU) 2019/360 as regards the annual supervisory fees charged by the European Securities and Markets Authority to trade repositories for 2021
SFTR - ESMA publishes final report and guidelines on the calculation positions by trade repositories - 25 May 2021
The European Securities and Markets Authority (ESMA) has published its final report and guidelines (ESMA74-362-1986) on the calculation of positions by trade repositories under the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR). The purpose of the guidelines is to ensure that a uniform methodology is used under the European Market Infrastructure Regulation (648/2012/EU) (EMIR) and the SFTR, while taking into account the specificities of securities financing transactions reporting. The guidelines clarify how to comply with:
- Article 12(2) of the SFTR, which requires trade repositories to collect and maintain details of securities financing transactions;
- Article 80(4) of EMIR, as referred to in 5(2) of SFTR, which sets out a general requirement for trade repositories to calculate positions; and
- Article 5 of regulatory technical standards on data aggregation, which requires trade repositories to calculate positions in securities financing transactions in a harmonised and consistent manner.
High-quality position data is necessary for the assessment of systemic risks to financial stability by the relevant authorities.
The guidelines will apply from 31 January 2022.
Final report and guidelines on calculation of positions in securities financing transactions by trade repositories (ESMA74-362-1986)
Press release
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Commodity derivatives - ESMA publishes consultation paper on draft technical standards - 26 May 2021
The European Securities and Markets Authority (ESMA) has published a consultation paper (ESMA70-156-4067) on draft technical standards for commodity derivatives. The consultation paper seeks stakeholders’ views on the regulatory technical standards that ESMA is required to develop under the Markets in Financial Instruments Amending Directive ((EU) 2021/338) (MiFID II Amending Directive) and forms part of the post-COVID-19 MiFID II recovery package.
The MiFID II Amending Directive introduces significant changes to the MiFID II commodity framework, including to the position limit regime. ESMA’s proposals relating to the application of position limits to commodity derivatives focus on:
- developing procedures for financial entities undertaking hedging activities and for liquidity providers to apply for an exemption from position limits; and
- suggesting other technical adjustments to improve the application of the position limit regime in practice.
The consultation paper also contains ESMA’s proposals for technical standards on position management controls. The consultation closes on 23 July 2021, following which ESMA intends to consider the responses received, finalise the draft technical standards and submit a final report to the European Commission by November 2021.
Consultation paper: Technical standards for commodity derivatives (ESMA70-156-4067)
Response form
Webpage
Press release
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Functioning of the European Supervisory Authorities - ESMA publishes response to European Commission consultation - 26 May 2021
The European Securities and Markets Authority (ESMA) has published its response to the European Commission’s targeted consultation on the functioning of the European Supervisory Authorities (that is ESMA, the European Banking Authority and the European Insurance and Occupational Pensions Authority).
The response reflects the views of the Board of Supervisors on existing issues and limitations that could be addressed in the Regulation establishing ESMA (1095/2010) and other relevant EU financial services legislation. The recommendations focus on:
- reinforcing ESMA’s approach to supervisory convergence;
- considering the merits of EU level direct supervision;
- building ESMA’s data capabilities;
- ensuring the single rulebook remains fit for purpose; and
- alleviating funding issues.
ESMA notes that the recommendations put forward aim to support the objectives of the Capital Markets Union and further promote and facilitate supervisory convergence across EU Member States.
Letter to European Commission: ESMA response to the target consultation on the functioning of the European Supervisory Authorities
Press release
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Disclosure Requirements for Initial Reviews and Preliminary Ratings - ESMA publishes consultation paper - 26 May 2021
The European Securities and Markets Authority (ESMA) has published a consultation paper (ESMA33-9-413) on guidelines on disclosure requirements for initial reviews and preliminary ratings under the Credit Rating Agencies Regulation ((EU) 1060/2009) (CRA Regulation). The CRA Regulation includes a number of provisions that are designed to provide greater clarity to market participants as to whether entities or debt instruments have been subject to an initial review or a preliminary rating by credit rating agencies (CRAs) before receiving a credit rating. The objective of these provisions is to mitigate against the effects of ratings shopping through greater transparency.
ESMA has engaged with CRAs over a number of years to assess current market practices around initial reviews and preliminary ratings, with the aim of identifying possible inconsistences in CRAs’ practices and defining necessary steps to address these inconsistencies.
The purpose of this consultation paper is to propose guidance that will address inconsistencies in the interpretation of these provisions. ESMA seeks feedback on the following proposals that aim to clarify:
- how the term ‘initial review and preliminary rating’ should be understood for the purposes of the CRA Regulation’s public disclosure requirements;
- the content and timing of CRAs’ public disclosures for interactions that meet the standard of ‘initial review and preliminary rating’; and
- the steps to ensure that public disclosures are more accessible for investors and the market.
The consultation closes on 4 August 2021. ESMA is seeking feedback from debt issuers and users of credit ratings, as well as CRAs. ESMA intends to consider the responses it receives in Q3 2021 and publish a final report by the end of Q4 2021. The draft guidelines are stated to apply from 1 July 2022.
Consultation paper: Guidelines on Disclosure Requirements for Initial Reviews and Preliminary Ratings (ESMA33-9-413)
Webpage
Press release
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CSDR Review - ESMA publishes proposals - 26 May 2021
The European Securities and Markets Authority (ESMA) has published a letter to Commissioner McGuinness on its proposals regarding the European Commission’s current review of the Central Securities Depositories Regulation (909/2014) (CSDR). The review seeks to assess how EU rules on central securities depositories (CSDs) are working, especially how CSDs are able to operate in different countries across the EU, how requests to use their services are handled, and whether there are other substantive barriers to competition in this sector that need to be addressed.
In the letter, ESMA expressed its views on a number of key points that it believes should be addressed in this review, namely:
- the status of TARGET2-Securities (T2S);
- the arrangement for the supervision/oversight of T2S;
- the third-country CSD (TC-CSD) recognition regime; and
- the frequency of ESMA reports to the European Commission on CSDR implementation.
ESMA notes that in the coming months it will provide further input through the publication of two more reports on banking-type ancillary services, and on the use of technological innovation by CSDs.
ESMA’s Proposals regarding the Review of the CSD Regulation (CSDR)
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Securitisation Regulation - ESMA publishes consultation paper on synthetic securitisations regulatory technical standards - 27 May 2021
The European Securities and Markets Authority (ESMA) has published a consultation paper on draft regulatory technical standards (RTS) implementing the amended Securitisation Regulation ((EU) 2021/557). The amended Regulation requires that certain securitisations meeting pre-defined simple, transparency and standardised (STS) requirements, must be reported using standardised templates for STS notification published on ESMA’s website.
The consultation paper sets out ESMA’s proposed draft RTS and implementing technical standards (ITS) specifying the content and format of the standardised templates for STS notification of on-balance sheet (synthetic) securitisations. It builds on the existing technical standards for STS notification of traditional securitisations, while taking into account specific features of synthetic securitisations. It also includes targeted technical amendments to the STS notification templates for traditional securitisations.
The consultation closes on 20 August 2021. ESMA is seeking feedback from originators, sponsors and institutional investors in securitisation. The draft RTS and ITS are expected to be submitted to the European Commission for endorsement by 10 October 2021.
Consultation paper: Draft technical standards on content and format of the STS notification for on-balance sheet securitisations under the amended Securitisation Regulation (ESMA82-402-200)
Response form
Press release
Bank of England
UK EMIR - Bank of England publishes consultation paper on modifications to scope of contracts subject to the derivatives clearing obligation to reflect interest rate benchmark reform - 20 May 2021
The Bank of England (BoE) have published a consultation paper setting out its proposals to modify the scope of contracts that are subject to the derivatives clearing obligation under the retained EU law version of the European Market Infrastructure Regulation (648/2012/EU) (UK EMIR) to reflect the ongoing reforms to interest rate benchmarks.
The classes of OTC derivatives contracts that are mandated to be cleared in the UK comprise certain standardised interest rate derivative and credit default swap (CDS) contracts. Given the anticipated changes in market activity resulting from interest rate benchmark reform, the BoE intends to remove contracts that reference benchmarks being discontinued and replace them with overnight index swaps, with the same range of maturities, that reference the replacement near risk-free reference rate benchmarks selected for each currency.
The BoE’s proposed changes are limited to those relating to benchmarks currently within the scope of the clearing obligation that are due to be discontinued by January 2022. The BoE proposes to remove contracts referencing EONIA (to be replaced with contracts referencing €STR); GBP LIBOR (to be replaced with contracts referencing SONIA); and JPY LIBOR. The BoE’s proposals do not relate to the transition from USD LIBOR as publication of the most widely used USD settings will cease in June 2023.
The dates on which each of the modifications to the clearing obligation come into force will coincide with key dates associated with the broader transition of LIBOR to alternative risk-free reference rates. The BoE’s proposals will result in changes to the onshored version of Commission Delegated Regulation (EU) 2015/2205 supplementing EMIR in relation to regulatory technical standards on the clearing obligation.
The consultation closes on 14 July 2021. The BoE then intends to publish the final version of the technical standards instrument in autumn 2021, having considered consultation responses and subject to HM Treasury’s approval. The BoE also intends to keep the scope of the derivatives clearing obligation under review, including by monitoring developments in relation to the transition of JPY and USD interest rate derivatives.
Consultation Paper: Derivatives clearing obligation – modifications to reflect interest rate benchmark reform – amendments to binding technical standards 2015/2205
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