Changes from report parliamentary committee draft to plenary report

Added3. In calculating the positions referred to in paragraph 1, the non-financial counterparty shall include all the OTC derivative contracts that are not cleared in a CCP authorised under Article 14 or recognised under Article 25 entered into by the non-financial counterparty which are not objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of the non-financial counterparty or of that group.

RemovedArticle 1 – paragraph 1 – point 12, Article 17b – paragraph 2 – point b: deleted

Added4. ESMA shall develop draft regulatory technical standards, after having consulted the ESRB and other relevant authorities, specifying all of the following:

RemovedRegulation (EU) No 648/2012

Added(a) criteria for establishing which OTC derivative contracts are objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity referred to in paragraph 3;

RemovedArticle 1 – paragraph 1 – point 12, Article 17b – paragraph 2 – point c: deleted

Added(b) values of the clearing thresholds for uncleared derivatives, which are determined taking into account the systemic relevance of the sum of net positions and future net exposures per counterparty. ESMA shall also assess whether an aggregate activity threshold, taking into account the overall aggregate position in OTC derivatives of a financial counterparty, is necessary to ensure a prudent coverage of financial counterparties under the clearing obligation and set a level for such a threshold;

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Added(c) the mechanisms triggering a review of the values of the clearing thresholds following significant price fluctuations in the underlying class of OTC derivatives or a significant increase of financial stability risks.

RemovedArticle 1 – paragraph 1 – point 12, Article 17b – paragraph 3 – subparagraph 1: Within 10 working days of receipt of the college opinion, ESMA shall, after duly considering the opinion of the college, including any conditions or recommendations contained therein, adopt its decision and transmit it to the CCP's competent authority and the college.

AddedESMA shall submit those draft regulatory technical standards to the Commission by … [PO: please insert the date =12 months from the date of entry into force of this Regulation].

RemovedChange to reflect the move to ESMA as the supervisor of EU CCPs. See explanatory statement for greater details.

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

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AddedESMA shall review, in consultation with the ESRB, the clearing thresholds referred to in the first subparagraph, point (b), taking into account, in particular, the interconnectedness of financial counterparties. That review shall be conducted at least every 2 years, and earlier where necessary or where required under the mechanism established under the first subparagraph, point (c), and may propose changes to the thresholds as specified in the first subparagraph, point (b), by the regulatory technical standards adopted pursuant to this Article. When reviewing the clearing thresholds, ESMA shall consider whether the classes of OTC derivatives, for which a clearing threshold has been set, are still the relevant classes of OTC derivatives or if new classes should be introduced.

RemovedArticle 1 – paragraph 1 – point 12, Article 17b – paragraph 3 – subparagraph 2: Where ESMA does not agree with the opinion of the college, including any conditions or recommendations contained therein, its decision shall contain full reasons and an explanation of any significant deviation from that opinion or conditions or recommendations.

AddedThat periodic review shall be accompanied by a report by ESMA on the subject.

RemovedChange to reflect the move to ESMA as the supervisor of EU CCPs. See explanatory statement for greater details.

Added5. Each Member State shall designate an authority responsible for ensuring that the obligations of non-financial counterparties under this Regulation are met. That authority shall report to ESMA at least once a year, and more frequently where an emergency situation is identified under Article 24, on the activity in OTC derivatives of the non-financial counterparties it is responsible for as well as that of the group they belong to.

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AddedAt least every 2 years, ESMA shall present a report to the European Parliament, the Council and the Commission on the activities of Union non-financial counterparties in OTC derivatives, identifying areas where there is a lack of convergence and coherence in the application of this Regulation as well as potential risks to the financial stability of the Union.’;

RemovedArticle 1 – paragraph 1 – point 12 a (new), Article 17b a (new): (12 a) the following article is inserted: / ‘Article 17ba / Procedures for implementation by CCPs of 'business as usual' changes / 1. A change that a CCP intends to adopt shall be directly implemented by the CCP and shall not be subject to the procedures referred to in Articles 17 and 17a where such a change: / (a) does not qualify as material under Article 17; / (b) does not qualify as non-material pursuant to Article 17a(1); and / (c) does not fulfil the conditions under Article 17a(2). / 2. ESMA shall regularly review the implementation by CCPs of changes that meet the requirements of paragraph 1 and report to the college of each CCP in the Union on their appropriateness.

Added(7) Article 11 is amended as follows:

RemovedSee corresponding Recital 21.

Added(a) in paragraph 2, the following subparagraph is added:

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Added‘A non-financial counterparty becoming subject for the first time to the obligations laid down in the first subparagraph shall set up the necessary arrangements to comply with those obligations within four months following the notification referred to in Article 10(1), second subparagraph, point (a). A non-financial counterparty shall be exempted from those obligations for contracts entered into during the four months following that notification.’;

RemovedArticle 1 – paragraph 1 – point 13 – point b a (new), Article 18 – paragraph 4 – subparagraph 3 (new): (b a) in paragraph 4, the following subparagraph is added: / "For the purpose of adding points to the agenda, the members of the college shall consider the outcome of the work carried out by the Joint Monitoring Mechanism."

Added(b) in paragraph 3, the following subparagraphs are added:

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

Added‘Financial and non-financial counterparties shall notify EBA and their competent authorities about the models used for initial margin calculation with regard to risk management procedures laid down in the regulatory technical standards referred to in paragraph 15, point (a). Where EBA or the national competent authorities object, the counterparty is entitled to continue using the initial margin model for a period of up to one year following receipt of the objection. Where counterparties cease using such models, they shall notify EBA and their competent authorities thereof by the end of the quarter in which they ceased using the model.

RemovedArticle 18 of EMIR should be amended to include a requirement for the college members to consider the outcome of the work carried out by the JMM when suggesting topics to be included in the agenda of college meetings. This should aid in following up on the work carried out by the JMM within the existing supervisory framework for the EU CCP, to the extent relevant for that specific CCP’s activities or risk profile.

AddedFinancial counterparties shall report information on the risk-management procedures referred in the first subparagraph, including, where relevant, in relation to initial margin models used, to EBA and their competent authorities.

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Added‘A non-financial counterparty becoming subject for the first time to the obligations laid out in the first subparagraph shall set up the necessary arrangements to comply with those obligations within four months following the notification referred to in Article 10(1), second subparagraph, point (a). A non-financial counterparty shall be exempted from those obligations for contracts entered into during the four months following that notification.

RemovedArticle 1 – paragraph 1 – point 14 – point a, Article 19 – paragraph 1 – subparagraph 2: If no joint opinion is reached in accordance with the first subparagraph, the college shall adopt a majority opinion within the same period.;

Added(ba) the following paragraph is inserted:

RemovedAlignment with amendments to 17(4).

Added“3a. Notwithstanding paragraph 3, single-stock options and equity index options not cleared by a CCP shall be temporarily exempted from risk-management procedures that require the timely, accurate and appropriately segregated exchange of collateral.

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AddedESMA shall monitor the impact of the exemption under the first subparagraph on financial stability, as well as regulatory developments in relation to the treatment of single-stock options and equity index options in non-EU jurisdictions, and shall, at least every two years, submit a report thereon to the Commission. After submission of the report by ESMA, the Commission shall assess whether international developments have led to more convergence in the treatment of single-stock options and equity index options and whether the temporary exemption of such options is still justified. The Commission may adopt a delegated act specifying that, after the expiry of an adaptation period, the exemption is to be removed. The adaptation period shall not exceed two years.

RemovedArticle 1 – paragraph 1 – point 15 – introductory part, Article 20: (15) Article 20 is replaced by the following:

AddedThe Commission is empowered to adopt the delegated act referred to in the second subparagraph of this paragraph in accordance with Article 82.”

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Added(bb) the following paragraph is inserted:

RemovedArticle 1 – paragraph 1 – point 15, Article 20 – paragraphs 1 and 2: "1. Without prejudice to Article 22(3), ESMA shall withdraw authorisation where the CCP: / (c) is no longer in compliance with the conditions under which authorisation was granted and has not taken the remedial action requested by ESMA within a set time frame; / 2. Where ESMA considers that one of the circumstances referred to in paragraph 1 applies, it shall, within five working days, notify the CCP's competent authority and the members of college accordingly."

Added‘12a. EBA shall set up a central validation function for industry-wide models used for the purpose of complying with the requirements set out in paragraph 3. In its role as central validator, EBA shall provide guidance on the general aspects of those models, such as their calibration, design, and instruments and assets class coverage.

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

AddedEBA shall collect feedback from competent authorities, from ESMA and from EIOPA, and coordinate their views, and shall serve as a single point of discussion with the industry.

RemovedChange to reflect the move to ESMA as the supervisor of EU CCPs. See explanatory statement for greater details.

AddedEBA shall also assist competent authorities in their approval processes regarding the general aspects of the implementation of those models. Competent authorities shall be solely responsible for validating the implementation of those models at the supervised entity level.

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AddedEBA shall charge a fee to counterparties using industry-wide models referred to in the first subparagraph. The fee shall be proportionate to the turnover of the counterparties concerned and shall cover all costs incurred by EBA for the performance of its tasks in accordance with the first subparagraph.’;

RemovedArticle 1 – paragraph 1 – point 15, Article 20 – paragraph 3: 3. ESMA shall consult the CCP's competent authority and the members of the college, in accordance with paragraph 6, on the necessity to withdraw the authorisation of the CCP, except where a decision is required urgently.

Added▌

RemovedChange to reflect the move to ESMA as the supervisor of EU CCPs. See explanatory statement for greater details.

AddedEBA may issue guidelines or recommendations with a view to ensure a uniform application of the risk-management procedures referred to in the first subparagraph, in accordance with the procedure laid down in Article 16 of Regulation (EU) No 1095/2010.

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AddedEBA shall develop drafts of those guidelines or recommendations in cooperation with the ESAs.’;

RemovedArticle 1 – paragraph 1 – point 15, Article 20 – paragraph 4: 4. The CCP's competent authority or any member of the college may, at any time, request that ESMA examine whether the CCP remains in compliance with the conditions under which authorisation was granted.