European Commission proposes simpler and more efficient derivatives rules
European Commission - Press release , Brussels , 4 May 2017
The European Commission is today proposing some targeted reforms to improve the functioning of the derivatives market in the EU . The reforms provide simpler and more proportionate rules for over-the-counter derivatives to reduce costs and regulatory burdens for market participants without compromising financial stability . A good example of better regulation in practice , this is essential to the creation of a Capital Markets Union ( CMU ), a key part of the Investment Plan for Europe , and for investments , growth and jobs by improving the efficiency of the market while maintaining prudential objectives . The EU adopted the European Market Infrastructure Regulation ( EMIR ) in 2012 following the financial crisis to better manage and monitor the risks arising from derivatives markets for financial stability . Today ' s reforms to EMIR build on the results of the Commission ' s Call for Evidence , a public consultation looking at the cumulative effect of the new financial sector rules put in place since the crisis . It is also part of the Commission ' s efforts to ensure that EU legislation delivers results for citizens and businesses effectively and at minimum cost ( REFIT ). Valdis Dombrovskis Vice-President responsible for Financial Stability , Financial Services and Capital Markets Union said : " The European Market Infrastructure Regulation is at the heart of the EU ' s financial reforms . Today ' s proposal ensures that EMIR achieves its objective of reducing systemic risk in the OTC derivatives market , while keeping costs to a minimum for the real economy . The proposal builds on the Commission ' s Call for Evidence and deepens our Capital Markets and our efforts to support investment , growth , and jobs ." Jyrki Katainen , Vice-President for Jobs , Growth , Investment and Competitiveness said : " Our aim is to simplify rules as well as to eliminate disproportionate costs and burdens to small companies in the financial sector , corporates and pension
funds . The targeted changes will deliver real benefits for the industry , without endangering financial stability . Building on consultations with stakeholders , this is a prime example of better regulation ." The proposal introduces more proportionate rules for corporates . It re-focusses the scope of the clearing obligation for financial counterparties to include some additional relevant market players while exempting the smallest financial counterparties . It also allows for more time to develop clearing solutions for pension funds . In addition , the Commission is streamlining the application of reporting requirements and making them more proportionate ; it is also introducing improvements to ensure the quality of reported data . The changes include measures that could save market participants , and in particular corporates such as energy companies or manufacturers , up to € 2.6 billion in operational costs and up to € 6.9 billion in one-off costs . Today , the Commission also adopted a Communication setting out its intentions to present further legislative proposals before the summer to address important and emerging challenges in derivatives clearing as its scale and importance grows . Further changes to EMIR will be necessary to ensure financial stability , as well as the safety and soundness of CCPs that are of systemic relevance for EU markets and to support the further development and deepening of the Capital Markets Union . In particular , the future proposal should seek to enhance the common EU supervisory arrangements for central counterparties ( CCPs ). In this context , specific arrangements based on objective criteria are necessary to ensure that that CCPs that play a key systemic role for EU financial markets are subject to the safeguards provided by the EU legal framework , including , where necessary , enhanced supervision at EU level and / or location requirements .
28 www . buysideintel . com Summer 2017