The EC Vice President Valdis Dombrovskis gave opening remarks at the European Parliament Plenary debate on the revision of European Market Infrastructure Regulation (EMIR). He mentioned that the proposal on EMIR being put forward is about simplifying EMIR and reducing costs and burdens where possible, without putting into question the core objectives of EMIR— that is, financial stability, risk mitigation, and transparency. The proposal is part of the Regulatory Fitness and Performance program (REFIT) of EC.
Mr. Dombrovskis said: "The need to revise some of EMIR's requirements became evident from the responses we got to the EC’s general Call for Evidence on financial services legislation in 2016. Our proposal is technical, but important. Its saving potential is big. The estimated cost reductions are up to EUR 6.9 billion in fixed or one-off costs, and up to EUR 2.6 billion in annual operational costs." The proposal includes a more proportionate clearing obligation for non-financial firms. It exempts the smallest financial counterparties from the clearing obligation altogether. It introduces a new mechanism to suspend clearing in exceptional circumstances. It incentivizes clearing and improves access to it. It simplifies reporting requirements for businesses, without compromising the quality of data. He also highlighted that companies, market participants, regulators, and supervisors agree on the need for this proposal and largely support the proposal.
He further mentioned that while the market has progressed, it has not yet adopted viable solutions for pension funds to centrally clear their derivatives. Over the past months, EC brought together all stakeholders to discuss progress toward a clearing solution for pension funds. He clarified that progress during the extended exemption period must be monitored and EC will set up a monitoring group for that purpose. Finally, he mentioned that the EMIR proposal is aimed to introduce some targeted amendments to simplify and to make the EMIR requirements more proportionate. However, these amendments need to uphold the fundamental objectives of EMIR: for instance, when it comes to reducing requirements to report or exchange bilateral margins for derivatives. He said, "We must keep in mind that this piece of legislation is one of the cornerstones of the new system we put in place after the crisis, in agreement with the G20. It is our collective responsibility to ensure that it remains effective."
Related Link: Speech
Keywords: Europe, EU, Securities, EMIR, REFIT, Proportionality, Clearing Obligation, Systemic Risk, EC
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
Previous ArticleESMA Issues Updated Versions of XML Schema for MiFIR Reporting
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).