Changes from report parliamentary committee draft to plenary report

RemovedRegulation (EU) No 648/2012

Added(9) Regulation (EU) No 648/2012 promotes the use of central clearing as the main risk-mitigation technique for OTC derivatives. The risks associated with an OTC derivative contract are therefore best mitigated when that derivative contract is cleared by a CCP authorised under Article 14 or recognised under Article 25 of that Regulation. It follows that in the calculation of the position that is compared to the thresholds specified pursuant to Article 10(4), point (b), of Regulation (EU) No 648/2012, only those derivative contracts that are not cleared by a CCP authorised under Article 14 or recognised under Article 25 of that Regulation should be includedin that calculation.

RemovedArticle 1 – paragraph 1 – point 2 – introductory part, Article 4 – paragraph 1: (2) Article 4 is amended as follows:

Added(9a) Post-trade risk reduction services generate non price-forming transactions to reduce risk in derivatives portfolios without changing the market risk. Post-trade risk reduction services include portfolio compression, portfolio optimisation and rebalancing services. Post-trade risk reduction services reduce systemic risk and operational risk, and are therefore a valuable tool in improving the resilience of the derivatives market. As explained by ESMA in its Report to the European Commission of 10 November 2020 as well as in its letter to the Commission of 1 April 2022, the application of the clearing obligation to transactions resulting from post-trade risk reduction services limits the use of those services to uncleared portfolios, and can lead to an increase in the use of complex products that are not subject to the clearing obligation. To facilitate the use of post-trade risk reduction services, a targeted and conditional exemption from the clearing obligation for transactions resulting from post-trade risk reduction services should be introduced. Such an exemption should concern only the risk neutral transactions resulting from the post-trade risk reduction exercise, while it would leave the original trades, in respect of which the risk reduction exercises are performed, subject to the clearing obligation where applicable. Accordingly, the exemption would remove barriers to the use of post-trade risk reduction services in portfolios to be cleared, allow a broader range of counterparties to have access to those risk reduction techniques, and reduce market complexity. By facilitating risk reduction, the increased use of post-trade risk reduction services would decrease collateral requirements for counterparties, and thus improve the overall availability of liquidity in the Union derivatives market. To avoid any circumvention of the clearing obligation, the exemption should be targeted and conditional. In other words, it should be limited to post-trade risk reduction services that mitigate or reduce risks and that are performed by a third party post-trade risk reduction service provider independently and under certain conditions. ESMA should be mandated to develop regulatory technical standards to further specify and ensure the uniform application of such conditions. In addition, to ensure that ESMA and national competent authorities can carry out their supervisory tasks in relation to the clearing obligation, counterparties should notify their intention to apply the exemption.

RemovedRegulation (EU) No 648/2012

Added(10) It is necessary to address the financial stability risks associated with excessive exposures of Union clearing members and clients to systemically important third-country CCPs (Tier 2 CCPs) that provide clearing services that have been identified by ESMA as clearing services of substantial systemic importance pursuant to Article 25(2c) of Regulation (EU) No 648/2012. In December 2021, ESMA concluded that the provision of certain clearing services provided by two Tier 2 CCPs, namely for interest rate derivatives denominated in euro and Polish zloty, Credit Default Swaps (CDS) denominated in euro and Short-Term Interest Rate Derivatives (STIR) denominated in euro, are of substantial systemic importance for the Union or one or more of its Member States. As noted by ESMA in its December 2021 assessment report, were those Tier 2 CCPs to face financial distress, changes to those CCPs’ eligible collateral, margins or haircuts may negatively impact the sovereign bond markets of one or more Member States, and more broadly the Union financial stability. Furthermore, disruptions in markets relevant for monetary policy implementation may hamper the transmission mechanism critical to central banks of issue. Measures requiring financial counterparties and non-financial counterparties that are subject to the clearing obligation to hold, directly or indirectly, active accounts▌ at CCPs established in the Union are therefore appropriate. That requirement should reduce the provision of those clearing services by those Tier 2 CCPs to a level where such clearing is no longer of substantial systemic importance. In light of recent market developments, in particular concerning central securities depositories, it is also appropriate that the requirement applies only to interest rate derivatives denominated in euro and Polish zloty and STIR derivatives denominated in euro, in addition to any other clearing service deemed to be of substantial systemic importance by ESMA in its future assessments pursuant to Regulation (EU) No 648/2012.

RemovedArticle 1 – paragraph 1 – point 2 – point b (new), Article 4 – paragraph 2 a (new): (b) the following paragraph is inserted: / 2a. Without prejudice to risk-mitigation techniques under Article 11, OTC derivative contracts that are formed and established by, and are a part and the result of, post-trade risk reduction (PTTR) transactions as referred to in Article 4aa, shall not be subject to the clearing obligation where that is the agreement of the parties to the transaction.

Added(10a) Given the novelty of the requirement on financial and non-financial counterparties that are subject to the clearing obligation to hold, directly or indirectly, accounts at CCPs established in the Union and its potential impact on the competitiveness of clearing members established in the Union and on clients, it is appropriate that the requirement is phased in gradually. Initially, financial and non-financial counterparties should be required to exchange initial and variation margins in an account at a CCP established in the Union, and to ensure that the necessary IT connectivity and legal documentation is in place. In order to ensure the resilience of those accounts in the face of a significant and sudden increase of clearing activity, it is also appropriate to regularly stress test those accounts, and to report to ESMA on the outcome of those stress tests. Finally, it is also appropriate that the requirement only applies to derivative contracts that are entered into after the entry into force of this Regulation, so as not to compromise the existing positions of the counterparties subject to the requirement.

RemovedSee Recital 9a.

Added(11) The financial stability risks associated with excessive exposures of clearing members established in the Union and clients to systemically important third-country CCPs (Tier 2 CCPs) may not be sufficiently addressed by the requirement to hold active accounts at CCPs established in the Union. It is therefore appropriate to provide for the possibility of the Commission adopting a delegated act in order to supplement that requirement by specifying the details of the level of substantially systemic clearing services to be maintained in the active accounts in Union CCPs by financial and non-financial counterparties subject to the clearing obligation. Such calibration should not go beyond what is necessary and proportionate to reduce clearing in the identified clearing services at Tier 2 CCPs concerned. The Commission should consider the goal of the capital markets union, and should only adopt the delegated act if the identification of the level of substantially systemic clearing services to be maintained in the active accounts in the Union clearly contributes to financial stability without distorting competition dynamics in the Union by, amongst other things, incentivising the creation of vertical silos in market infrastructures, and without affecting the international competitivneess of Union counterparties. In that regard, the Commission, supported by an ESMA report if necessary, should carry out a cost-benefit analysis to better consider the costs, risks and the burden such calibration entails for financial and non-financial counterparties, the risk of reduction of their market share, and the risk that those costs are passed on to non-financial firms or end investors. In addition, suitable phase-in periods for the progressive implementation of the requirement to hold a certain level of the clearing activity in the accounts at Union CCPs should be foreseen.

RemovedRegulation (EU) No 648/2012

Added(11a) Financial stability considerations are strongly interlinked with an adequate supervisory framework, and specifying the details of the level of substantially systemic clearing services to be maintained in active accounts at CCPs in the Union can only be effective if it is accompanied by proportionate measures related to the supervision of Union CCPs. It is therefore appropriate that the Commission adoption of the delegated act supplementing the requirement to hold an active account at CCPs established in the Union is subordinated to the direct supervision of Union CCPs by ESMA.

RemovedArticle 1 – paragraph 1 – point 3 – introductory part, Article 4a – paragraph 3: (3) Article 4a is amended as follows:

Added(12) To ensure that clients are aware of their options and can take an informed decision as where to clear their derivative contracts, clearing members and clients that provide clearing services in both Union and recognised third-country CCPs should inform their clients about the option to clear a derivative contract in a Union CCP, and should clearly disclose the costs associated with clearing▌ services in the different CCPs where it is possible to clear those contracts. Such obligation to inform should be distinct from the active account requirement. Relevant clearing members should also systematically propose Union clearing alternatives to clients even for services that are not determined as being of substantial systemic importance by ESMA.

RemovedRegulation (EU) No 648/2012

Added(13) To ensure that ESMA has the necessary information on the clearing activities undertaken by clearing members or clients in recognised CCPs, a reporting obligation should be introduced for such clearing members or clients. The information to be reported should distinguish between securities transactions, derivative transactions traded on a regulated market and over-the-counter (OTC) derivatives transactions. ESMA should, in close cooperation with the ESCB, specify the precise content and format of the information to be reported, and in doing so should ensure that the obligation does not create additional reporting requirements, unless necessary, so that the administrative burden for clearing members or clients is minimised. It is also appropriate to consider the concerns raised by the supervisory community about the data quality of the reporting made by financial and non-financial counterparties pursuant to Regulation (EU) No 648/2012. Entities subject to the reporting obligation pursuant to that Regulation should therefore be required to exercise due diligence by applying data quality checks before submitting their data. ESMA should be able to adopt appropriate penalties in the case of infringements of that due diligence requirement.

RemovedArticle 1 – paragraph 1 – point 3 – point a (new), Article 4a – paragraph 1: a) the first paragraph is replaced by the following: / "1. Every 12 months, a financial counterparty taking positions in OTC derivative contracts may calculate its aggregate month-end average positions in uncleared contracts for the previous 12 months in accordance with paragraph 3. / Where a financial counterparty does not calculate its positions, or where the result of the calculation of its aggregate month-end average position in uncleared contracts for the previous 12 months exceeds any of the clearing thresholds specified pursuant to Article 10(4), point (b), or when the result of the calculation of its aggregate month-end average position in OTC contracts for the previous 12 months exceeds the activity threshold specified pursuant to Article 10(4), point (b), the financial counterparty shall: / (a) immediately notify ESMA and the relevant competent authority thereof;

Added(13a) Under the current framework, ESMA receives transaction data under Regulation (EU) No 648/2012 and Regulation (EU) 2015/2365 of the European Parliament and of the Council, which provide a Union-wide view on markets, but not on CCPs' risk management. That lack of data creates substantial issues for ESMA, which requires timely and reliable information on CCPs’ activities and practices to fulfill its financial stability mandate. It is therefore necessary that a formal reporting requirement regarding CCP risk management data by Union CCPs to ESMA be introduced. That would also help to further strengthen standardisation and comparability across data and ensure it is delivered on time, while the fact that it covers similar data as the reports prepared by Union CCPs and shared with the college on a monthly basis means that it would not be an additional burden for CCPs. In addition to the possibility for ESMA to request data directly from CCPs, clearing members and clients during periods of market turmoil, the data received in the monthly voluntary data reports via the college should be formalised to ensure higher standardisation, comparability and timely delivery.

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02012R0648-20220812)

Added(14) Macroprudential supervision is not restricted to transactions between financial counterparties, but also requires the monitoring of exposures between financial and non-financial counterparties belonging to the same consolidation. Regulation (EU) 2019/834 of the European Parliament and of the Council amended Regulation (EU) No 648/2012 to introduce, inter alia, an exemption from reporting requirements for OTC derivative transactions between counterparties within a group, where at least one of the counterparties is a non-financial counterparty. That exemption has been introduced because intragroup transactions involving non-financial counterparties represent a relatively small fraction of all OTC derivative transactions and are used primarily for internal hedging within groups. As such, those transactions do not significantly contribute to systemic risk and interconnectedness with the rest of the financial system. The exemption for those transactions from reporting requirements has, however, limited the ability of ESMA, the ESRB and other authorities to clearly identify and assess the risks taken by non-financial counterparties. To ensure more visibility on intragroup transactions, considering their potential interconnectedness with the rest of the financial system and taking into account recent market developments, in particular strains on energy markets as a result of Russia’s unprovoked and unjustified aggression against Ukraine, while maintaining a proportionate approach that does not result in a substantial increase of the costs for non-financial counterparties, that exemption should be first removed for non-financial counterparties subject to the clearing obligation. ESMA should be required to assess whether the removal of the exemption for those non-financial counterparties results in a sufficiently clear improvement of its supervisory tasks and, if necessary, should propose to extend the reporting obligation to all non-financial counterparties.

RemovedTackling some technical issues with regard to the new methodology for calculating the thresholds. The amendments aim at ensuring that the clearing obligation keeps a prudent coverage under the new calculation methodology.

Added(15) To ensure that competent authorities are at all times aware of exposures at entity and group level and are able to monitor such exposures, competent authorities should establish effective cooperation procedures to calculate the positions in contracts not cleared at an authorised or recognised CCP andto actively evaluate and assess the level of exposure in OTC derivative contracts at entity and group level.

RemovedRegulation (EU) No 648/2012

Added(16) It is necessary to ensure that Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council relating to the criteria for establishing which OTC derivative contracts are objectively measurable as reducing risks continues to be appropriate in light of market developments. It is also necessary to ensure that the clearing thresholds laid down in that Commission Delegated Regulation relating to values of those thresholds properly and accurately reflect the different risks and characteristics in derivatives, other than interest rate, foreign exchange, credit and equity derivatives. ESMA should therefore also review and clarify, where appropriate, that Commission Delegated Regulation and propose amending it if necessary. ESMA is encouraged to consider and provide, inter alia, more granularity for commodity derivatives. That granularity could be achieved by separating the clearing thresholds by sector and type, such as differentiating between agriculture, energy or metal related commodities or differentiating those commodities based on other features such as environmental, social and governance criteria, environmentally sustainable investments or crypto-related features. During the review, ESMA should endeavour to consult relevant stakeholders that have specific knowledge on particular commodities.

RemovedArticle 1 – paragraph 1 – point 3 – point b (new), Article 4a – paragraph 3 – subparagraph 1: (b) in paragraph 3, the first subparagraph is replaced by the following:

Added(17) Non-financial counterparties that have to exchange collateral for OTC derivative contracts not cleared by a CCP should have sufficient time to negotiate and test the arrangements to exchange such collateral.

RemovedRegulation (EU) No 648/2012

Added(18) To ensure a uniform application of the risk-management procedures requiring the timely, accurate and appropriately segregated exchange of collateral with respect to OTC derivative contracts entered into by financial counterparties and non-financial counterparties, the European Supervisory Authorities (ESAs) should take the necessary actions to ensure such uniform application.

RemovedArticle 1 – paragraph 1 – point 3, Article 4a – paragraph 3 – subparagraph 1: In calculating the aggregate month-end average positions in uncleared contracts referred to in paragraph 1, the financial counterparty shall include all OTC derivative contracts that are not cleared in a CCP authorised under Article 14 or recognised under Article 25, entered into by that financial counterparty or entered into by other entities within the group to which that financial counterparty belongs.;

Added(18a) A number of public entities, such as central government, local authorities and other public sector entities, clear on a voluntary basis. When using clearing services, public entities should, in principle, use Union CCPs clearing services. In its letter of 1st April 2022, ESMA stressed that the modalities of public entities participation in CCPs vary across Member States. In particular, ESMA identified diverging practices regarding the calculation of the exposures of public entities to Union CCPs and their contributions to the financial resources of the CCP. Therefore, ESMA should be invited to work on further harmonisation and coordination regarding public entities’ clearing activities.

RemovedNo substantive change - alignment with language used in EMIR.

Added(18b) In order to avoid market fragmentation and ensure a level playing field, while acknowledging the fact that in some jurisdictions the exchange of variation and initial margin for single-stock options and equity index options is not subject to equivalent margin requirements, the treatment of those products should be phased in. That phase-in period would give ESMA time to monitor regulatory developments in other jurisdictions and for the Commission to ensure that appropriate requirements are in place in the Union to mitigate counterparty credit risk in respect of such contracts whilst avoiding any scope for regulatory arbitrage.

RemovedRegulation (EU) No 648/2012

Added(18c) In order to comply with the initial margin requirements set out in Regulation (EU) No 648/2012, many Union market participants use industry-wide initial margin models, such as the standard initial margin model (SIMM) developed by the International Swaps and Derivatives Association (ISDA). The design of those models is centrally decided and cannot be significantly affected by the preferences of every single user or by the different assessments of each competent authority validating the use of those models by entities it supervises. In practice, since the same model is used by a large number of Union counterparties, the resulting need for that model to be validated by a plurality of competent authorities gives rise to a coordination problem. To address that problem, EBA should be given the task of operating as the central validator of the general elements of such industry-wide models. In its role as central validator, EBA should develop a common view on the general aspects of those models, such as their calibration, design, and instruments and assets class coverage. To assist EBA in its work, EBA should collect feedback from competent authorities, ESMA and EIOPA, and coordinate their views. Given that competent authorities would continue to be responsible for validating the implementation of those models at the supervised entity level, EBA should assist them in their approval processes regarding the general aspects of the implementation of those models. In addition, EBA should serve as a single point of discussion with the industry to help ensure a more effective Union influence on the design of those models.

RemovedArticle 1 – paragraph 1 – point 3 a (new), Article 4a a (new): (3a) The following article is inserted: / Article 4aa / Exemption from clearing obligation for post-trade risk reduction services / 1. A PTTR transaction shall only be exempted from the clearing obligation under Article 4 where the PTRR service provider and each participant to the PTRR transaction comply with the requirements of this Article. / 2. A PTRR exercise shall meet all of the following conditions: / (a) be performed by a PRTT service provider independent of the market participants; / (b) be a market risk neutral exercise that does not contribute to price formation and might take the form of a compression, rebalancing or optimisation; / (c) be executed on a bilateral or multilateral basis and contain cleared and uncleared portfolios; / (d) reduce or mitigate risks or exposures in each of the portfolios submitted under it; / (e) where appropriate, include the possibility of concluding an offsetting transaction facing a CCP: / (f) where it includes a cleared portfolio, clear any PTRR transaction that reduces risk or exposure in such portfolio; / (g) be either accepted or rejected in its entirety, with the result that the participants to the PTRR exercise are not able to choose which trades to execute under that exercise. / 3. A PTRR service provider shall provide PTRR services under pre-agreed rules, using methods and algorithms in pre-scheduled cycles, and in a reasonable, transparent and non-discriminatory manner. Only entities initially submitting a portfolio to the …

Added(19) To ensure a consistent and convergent approach amongst competent authorities throughout the Union, authorised CCPs or legal persons that wish to be authorised under Article 14 of Regulation (EU) No 648/2012 to provide clearing services and activities in financial instruments should also be able to be authorised to provide clearing services and other activities in relation to non-financial instruments. Regulation (EU) No 648/2012 applies to CCPs as entities, and not to specific services, as set out in Article 1(2) of that Regulation. When a CCP clears non-financial instruments, in addition to financial instruments, ESMA should be able to ensure that the CCP complies with all requirements of Regulation (EU) No 648/2012 for all services it offers.

RemovedSee Recital 9a.

Added(20) It is necessary to explore additional means of enhancing the attractiveness of Union CCPs and increasing the competitiveness of Union firms. To achieve a proportionate approach that bolsters Union capital markets, maintains financial stability and strengthens the competitiveness of the Union's clearing system on a global scale, it is necessary to implement an incentives regime to encourage international counterparties to clear in the Union. However, Union CCPs face challenges in expanding their product offer and experience difficulties in bringing new products to the market. Those challenges and difficulties can be explained by certain provisions of Regulation (EU) No 648/2012 that render some authorisation procedures too long, complex and uncertain in their outcome. The process of authorising Union CCPs or extending their authorisation should therefore be simplified, while ensuring the appropriate involvement of ESMA and the college referred to in Article 18 of Regulation (EU) No 648/2012. First, to avoid significant, and potentially indefinite, delays when ESMA assesses the completeness of an application for an authorisation, ESMA should swiftly acknowledge receipt of that application and quickly verify whether the CCP has provided the documents required for the assessment. To ensure that Union CCPs submit all required documents with their applications, ESMA should develop draft regulatory and implementing technical standards specifying which documents should be provided, what information those documents should contain and in which format they should be submitted. When preparing the draft regulatory technical standards, ESMA should take into account existing documentation requirements and practices under Regulation (EU) No 648/2012 and streamline their submission where possible, as well as the importance of avoiding an excessive time to market and of ensuring that the information to be provided by the CCP applying for an extension of authorisation is proportional to the materiality of the change for which the CCP is applying. Second, to ensure an efficient and concurrent assessment of applications, CCPs should be able to submit all documents via a central database where they should be shared instantaneously with the CCP’s competent authority, ESMA and the college. Third, a CCP’s competent authority, ESMA and the college should, during the assessment period, engage and ask the CCP any questions to ensure a swift, flexible, and cooperative process for a comprehensive review. To avoid duplication and unnecessary delays, all questions and subsequent clarifications should also be shared simultaneously between the CCP’s competent authority, ESMA and the college.

RemovedRegulation (EU) No 648/2012

Added(21) There is currently uncertainty as to when an additional service or activity is covered by a CCP’s existing authorisation. It is necessary to address that uncertainty and to ensure proportionality when the proposed additional service or activity does not increase the risks for the CCP. It is therefore necessary to lay down that applications in those cases should not undergo the full assessment procedure. For that reason, it should be specified which additional clearing services and activities are non-material, and thus do not increase the risks for a Union CCP, and should be approved through a non-objection procedure by ESMA. That non-objection procedure should be applied where the CCP intends to clear a new currency in a class of financial instruments already covered by the CCP’s authorisation for which the CCP does not have in place the relevant payment facility, or where it intends to offer a new settlement or delivery mechanism or service which involves establishing links with a different securities settlement system, central securities depository or payment system, or where it intends to offer contracts that cannot be liquidated in the same manner or together with contracts already cleared by it. In addition, a CCP should also be able to ask ESMA for the non-objection procedure to apply where that CCP considers that the proposed additional service or activity would not increase its risks, in particular where the new clearing service or activity is similar to the services the CCP is already authorised to provide. The non-objection procedure should not require a separate opinion from ESMA and the college since such requirement would be disproportionate. There are also a number of changes that a CCP adopts on a regular basis ('business as usual' changes) that might not qualify as material or non-material. For those changes, the CCPs should not be subject to the procedures to extend the authorisations, but should notify ESMA before implmenting them directly. ESMA should regularly check those changes as part of the CCP annual review. That measure should significantly alleviate the burden on competent authorities, and greatly increase the capacity of CCPs to implement changes that do not modify their overall risk profile. Nonetheless, ESMA should regularly review how the changes in the authorisation and assessment procedures are implemented in practice, to ensure that they do not increase the financial stability risk for the Union.

RemovedArticle 1 – paragraph 1 – point 4, Article 7a – paragraph 1: 1. Financial counterparties or non-financial counterparties that are subject to the clearing obligation in accordance with Articles 4a and 10 and clear any of the categories of the derivative contracts referred to in paragraph 2 shall clear at least proportions of such contracts at active accounts at CCPs authorised under Article 14. / The clearing obligation referred to in the first subparagraph shall remain for as long as the derivative contracts referred to in paragraph 2 are being cleared.

Added(22) To foster a cooperative supervision of CCPs on an ongoing basis, the college should issue an opinion where ESMA considers withdrawing a CCP’s authorisation and when ESMA conducts the annual review and evaluation of that CCP.

RemovedClarification that there may be different proportions for different classes of derivatives and that the requirement applies throughout the duration of the contract.

Added▌

RemovedRegulation (EU) No 648/2012

Added(24) The clearing landscape in the Union has undergone major changes since 2019, when amending regulations to Regulation (EU) No 1095/2010 and Regulation (EU) No 648/2012 were adopted, and a more coordinated and integrated approach to the supervision of Union CCPs now appears necessary, especially as more systemic activity is expected to shift towards the Union due to the requirement to hold active accounts at Union CCPs for services of substantial systemic importance. ESMA should therefore be the direct supervisor of Union CCPs, and enhanced cooperation and integration between all relevant authorities is necessary to ensure that risks concentrated in Union CCPs are adequately monitored and managed, in order to minimise systemic risk and spill-over effects across Member States. Empowering ESMA with a direct supervisory role vis-a-vis Union CCPs requires adapting the existing supervisory framework under Regulation (EU) No 648/2012 , providing ESMA with decision-making powers over Union CCPs, but also clarifying how those new powers would interact with the supervisory role of the national competent authorities. Under a new and more integrated approach, relevant supervisory decisions should be drafted and adopted by ESMA, having taken into account the opinion of the college. The competent authority of the CCP may be requested by ESMA to assist with drafting decisions, the verification of activities of the CCP, and the day-to-day assessments. ESMA should be empowered to delegate specific supervisory tasks to competent authorities. ESMA should be in charge of coordinating the joint supervisory activities, including in relation to on-site inspections of Union CCPs. The change in approach should also cover the annual reviews.

RemovedArticle 1 – paragraph 1 – point 4, Article 7a – paragraph 1a (new): 1a. For the purposes of paragraph 1 of this Article, an account at a CCP authorised under Article 14 shall be deemed active where it complies with the following conditions: / (a) it satisfies initial margin and daily margin requirements against existing positions; / (b) new positions are entered into on a regular basis on the same account.

Added(25) It is necessary to ensure that the CCP complies with Regulation (EU) No 648/2012 on an ongoing basis, including after a non-objection procedure approving the provision of additional clearing services or activities, or after a non-objection procedure for the validation of a model change in which cases ESMA and the college do not issue a separate opinion. The review conducted by ESMA at least on an annual basis should therefore in particular consider such new clearing services or activities and any model changes. To ensure supervisory convergence and that Union CCPs are safe, robust and competitive in providing their services throughout the Union, the report of ESMA should be subject to an opinion by▌ the college and should be submitted every year.

RemovedProposal to have at least regular (to be defined) trading and clearing activity on the account for it to be deemed active during qualitative approach. See explanatory statement for more details.

Added(26) ESMA should have the means to identify potential risks to the Union’s financial stability. ESMA should therefore, in cooperation with the ESRB, EBA, EIOPA, and the ECB in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Council Regulation (EU) No 1024/2013, identify the interconnections and interdependencies between different CCPs and legal persons, including, as far as possible, shared clearing members, clients and indirect clients, shared material service providers, shared material liquidity providers, cross-collateral arrangements, cross-default provisions and cross-CCP netting, cross-guarantee agreements and risks transfers and back-to-back trading arrangements.

RemovedRegulation (EU) No 648/2012

Added(27) The central banks of issue of the Union currencies of the financial instruments cleared by authorised CCPs that have requested membership of the CCP Supervisory Committee are non-voting members of that committee. They only participate to its meetings for Union CCPs in the context of discussions about the Union-wide assessments of the resilience of those CCPs to adverse market developments and relevant market developments. Contrary to their involvement in the supervision of third-country CCPs, central banks of issue are thus insufficiently involved on supervisory matters for Union CCPs that are of direct relevance to the conduct of monetary policy and the smooth operation of payments systems, which leads to insufficient consideration of cross-border risks. It is therefore appropriate that those central banks of issue are able to attend as non-voting members all meetings of the CCP Supervisory Committee when it convenes for Union CCPs.

RemovedArticle 1 – paragraph 1 – point 4, Article 7a – paragraph 1 b (new): 1b. ESMA shall develop draft regulatory technical standards to specify how often new positions are to be entered into the same account in order for that account to be considered 'active' for the purposes of paragraph 1a. / ESMA shall submit those draft regulatory technical standards to the Commission by … [6 months after the date of entry into force of this amending Regulation]. / Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

Added(28) It is necessary to ensure a prompt exchange of information, knowledge sharing and effective cooperation between the authorities involved in the supervision of authorised CCPs, and in the monitoring of risks to the financial stability of the Union, and in particular where a swift decision by ESMA is required. It is therefore appropriate to create a framework for joint supervisory activities for each Union CCP to assist those supervisory authorities, including by providing input to ESMA within the context of the non-objection procedure for extending a CCP’s existing authorisation, assisting in establishing the frequency and depth of a CCP’s review and evaluation, and participating to on-site inspections. ▌

RemovedESMA should be empowered to specify how frequently different counterparties should trade in order for that account to be considered active. Flexibility will be required, given that there are counterparties that clear new transactions multiple times a day, and others that only clear once a week or less. ESMA may even consider whether a minimum threshold can apply (i.e. counterparties that clear less than once a month may not be subject to the requirement).

Added(29) To enhance the ability of relevant Union bodies to have a comprehensive overview of market developments relevant for clearing in the Union, monitor the implementation of certain clearing related requirements of Regulation (EU) No 648/2012 and collectively discuss the potential risks arising from the interconnectedness of different financial actors and other issues related to the financial stability it is necessary to establish a cross-sectoral monitoring mechanism bringing together the relevant Union bodies involved in the supervision of Union CCPs, clearing members and clients. Such Joint Monitoring Mechanism should be managed and chaired by ESMA as the Union authority▌ supervising Union CCPs and supervising systemically important third-country CCPs. Other participants should include representatives from the Commission, the EBA, EIOPA, the ESRB, the ECB and the ECB in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Council Regulation (EU) No 1024/2013.

RemovedRegulation (EU) No 648/2012

Added(30) To inform future policy decisions, ESMA, in cooperation with the other bodies participating in the Joint Monitoring Mechanism, should submit an annual report to the European Parliament, the Council and the Commission on the results of their activities.▌

RemovedArticle 1 – paragraph 1 – point 4, Article 7a – paragraph 1 c (new): 1c. The obligation laid down in paragraph 1 shall apply to derivative contracts entered into on or after... [the date of entry into force of this Regulation].

Added(31) The 2020 market turmoil as a result of the Covid-19 pandemic and the 2022 high prices on energy wholesale markets following Russia’s unprovoked and unjustified aggression against Ukraine showed that, while it is essential for competent authorities to cooperate and exchange information to address ensuing risks when events with cross-border impacts emerge, ESMA still lacks the necessary tools to ensure such coordination and a convergent approach at Union level. ESMA should therefore be able to convene meetings of the CCP Supervisory Committee, either on its own initiative or upon request, potentially with an enlarged composition, to coordinate effectively competent authorities’ responses in emergency situations. ESMA should also be able to ask, by simple request, information from market participants which is necessary for ESMA to perform its coordination function in those situations and to be able to issue recommendations to the competent authority. Finally, given that developments in financial markets could have direct implications for the banking system or for monetary policy decisions, representatives of relevant central banks of issue should always be invited to participate in the coordination meetings of the CCP Supervisory Committee in response to such emergency situations.