June 11, 2018

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

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