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EFAMA's Reply to ESMA consultation on clearing obligation for small counterparties

04 September 2016 | Policy position
EFAMA's Reply to ESMA consultation on clearing obligation for small counterparties

As a principle, EFAMA supports every effort made to enhance financial market regulation which reinforces the stability of the financial system, of which EMIR is an important part.


Prior to replying to the consultation, we wish to make the following general remarks.


Firstly, we fully support the points raised by ESMA that recognizes that several types of counterparties active in the OTC derivatives markets are facing numerous issues in relation to the access to central clearing due to:

- The difficulty to become a clearing member (“CM”) due to the related cost (e.g. minimum capital requirements), risk (e.g. mutualisation of default fund resources) and other legal issues;

- The limited interest of the clearing members to provide client clearing services outside from their biggest and most active clients;

- The lack of conclusion of indirect clearing arrangements for OTC derivatives instruments compared to the exchange traded derivatives market;

- The costs associated with the on-boarding of clients and the on-going management of the client cleared positions (including risk and compliance monitoring, trade management, collateral management, client reporting, client service), versus the revenues of the clearing member.


Secondly, we are supportive of the idea to delay the implementation of the clearing obligation for all instruments and for all counterparties in category 3. In addition, EFAMA considers that this delay should be extended to category 4 participants.

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