EMIR: ESMA reports on systemic risk of interoperability arrangements between CCPs

The European Securities and Markets Authority (ESMA) has published its final report on systemic risk and cost implications of interoperability arrangements between CCPs established under EMIR. The report describes the current interoperability arrangements between EU CCPs for certain product types including EU equities, EU government bonds and EU Exchange Traded Derivatives (ETDs) with an assessment of the benefits and impacts on costs for the relevant parties. The report also provides a prudential analysis at CCP level and sets out the risk management tools used to mitigate the potential risks arising from interoperability. The key risk under consideration is the counterparty credit risk resulting from exposures between interoperable CCPs.