ESMA issued the results of a peer review it conducted into how national competent authorities ensure that central counterparties (CCPs) comply with requirements under the European Markets Infrastructure Regulation (EMIR). The peer review covered the supervision—by national competent authorities—of CCPs’ default management procedures (DMPs), including how they simulate the default of a clearing member (fire drills).
Overall, ESMA found that the national competent authorities supervise DMPs adequately and that most EU CCPs have performed fire drills. However, the report also highlights the areas where divergences emerged with respect to national competent authorities’ supervisory approaches related to reviewing and testing of DMP and fire drills. It also identifies areas where supervisory convergence could be further enhanced, in addition to highlighting the existing good practices. A possible case of non-compliance with EMIR was also identified in the area of the frequency of fire drills, which will require further follow-up.
ESMA compared the supervisory approaches of the national competent authorities supervising the 17 CCPs established in EU at the time of the launch of the review on April 01, 2017. The ESMA review focused on assessing whether the supervisory practices put in place by national competent authorities to assess the compliance of the CCPs’ DMPs, are effective. However, ESMA found that not all national competent authorities do systematically review their respective CCPs’ DMP tests and fire drills.
Keywords: Europe, EU, Securities, EMIR, CCPs, DMPs, Peer Review, ESMA
Previous ArticleEBA Welcomes Final Basel III Reforms and Assesses Their Impact in EU
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA updated the report on the implementation of selected COVID-19 policies.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.