EMIR review: ESRB publishes paper

The European Systemic Risk Board (ESRB) has published a paper on the EU Commission's proposal to revise the European Market Infrastructure Regulation (EMIR). The paper is intended to highlight some issues which the ESRB deems important but does not include specific proposals.

• the framework under which third-country central counterparties (CCPs) are recognised to provide clearing services in the EU, which it believes could be reinforced;
• the possibility for further analysis with regard to CCPs offering their services in the EU, in the context of international work on the interconnectedness and concentration of clearing of certain financial instruments across CCPs;
• the possibility for future analysis of the potential interactions between the risk models used by CCPs to determine margin requirements and default fund contributions, and those used by intermediaries for risk mitigation in non-centrally cleared transactions, which could have implications for the EMIR Level 1 text; and
• the possibility for future analysis on whether to include further microprudential tools to limit the procyclical effects of margin and haircut-setting in the regulatory technical standards (RTS 153/2013).

Overall the ESRB supports the Commission's assessment that no fundamental change to the EMIR core requirements are needed at this time, although certain improvements may be possible.