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May 28, 2018

ESMA issued the final guidelines on anti-procyclicality margin measures for central counterparties (CCPs) under the European Market Infrastructure Regulation (EMIR). The guidelines will become effective from December 03, 2018. The existing CCP questions and answers (Q&A) 9(c) will be deleted as of the same date as the new guidelines cover its purpose.

Under EMIR, CCPs are required to monitor and account for procyclical effects of margins, including to make disclosures on its risk management practices such as the models used for the calculation of margins. To this end, these guidelines promote consistent supervision of such requirements,  including monitoring of the procyclicality of margin requirements, implementation of anti-procyclicality margin measures, and disclosures to facilitate margin predictability. The guidelines seek to establish consistent, efficient, and effective supervisory practices and to ensure a common, uniform, and consistent application of EMIR to limit procyclicality of CCP margins.

The adoption of the guidelines should enable national competent authorities to better supervise their CCPs in this respect. CCPs may also need to adapt their models and processes to the guidelines. The guidelines will be translated into the official languages of EU and within two months from the date of publication of the translations, each national competent authority must notify ESMA of its intent to whether or not to comply with the guidelines. 

 

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Keywords: Europe, EU, Securities, Guideline, Procyclicality, CCPs, EMIR, ESMA

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