BETA

101 Amendments of Pascal CANFIN related to 2010/0250(COD)

Proposal for a regulation
Recital 4

(4) Over-the-counter (OTC) derivatives lack transparency as they are privately negotiated contracts and any information concerning them is usually only available to the contracting parties. They create a complex web of interdependence which can make it difficult to identify the nature and level of risks involved. The financial crisis has demonstrated that such characteristics increase uncertainty in times of market stress and accordingly, pose risks to financial stability. This Regulation lays down conditions for mitigating those risks and improving the transparency of derivative contracts. regardless of the trading arrangements (trading venue or bilateral agreement) under which they are initially concluded

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 7

(7) The European Securities and Markets Authority (ESMA) acts within the scope of this Regulation by safeguarding the stability of financial markets in emergency situations and ensuring the consistent application of Union rules by national supervisory authorities and settling disagreements between them. It is also entrusted with developing legally binding regulatory technical standards and has a central role in the authorisation and monitoring of central counterparties and trade repositories. to ensure a consistent approach across the Union to the clearing and reporting of derivative contracts regardless of the trading arrangements (trading venue or bilateral agreement) under which they are initially concluded

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 8

(8) Uniform rules for clearing and reporting of transactions are required for derivative contracts set out in Annex I, Section C, numbers (4) to (10) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC21 that are traded over-the- counter or on organised trading venues such as regulated markets or other multilateral trading facilities.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 9 a (new)

(9 a) An entity established in the Union that intends to act as a CCP shall apply for a credit institution authorisation to the competent authority of the Member State where it is established. The authorisation shall be granted if the applicant fully complies with the provisions of this regulation and be limited to clearing activities. A special limited purpose banking licence should be defined under article 4(1) of Directive 200/49/EC of the European Parliament and of the Council.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 16

(16) Where appropriate, rules applicable to financial counterparties, should also apply to non-financial counterparties. It is recognised that non-financial counterparties use ~~OTC-~~derivative contracts in order to cover themselves against commercial risks directly linked to their commercial activities. Consequently, in determining whether a non-financial counterparty should be subject to the clearing obligation, consideration should be given to the purpose for which that non- financial counterparty uses ~~OTC~~ derivatives and to the size of the exposures that it has in those instruments. When establishing the threshold for the clearing obligation, ESMA should consult all relevant authorities, as for example regulators responsible for commodity markets, in order to ensure that the particularities of these sectors are fully taken into account. Moreover, by 31 December 2013, the Commission shall assess the systemic importance of the transactions of non- financial firms in ~~OTC~~ derivatives in different sectors, including the energy sector.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 20

(20) The introduction of a clearing obligation along with a process to establish which CCPs can be used for the purpose of this obligation may lead to unintended competitive distortions of the ~~OTC~~ derivatives market. For example, a CCP could refuse to clear transactions executed on certain trading venues because the CCP is owned by a competing trading venue. In order to avoid such discriminatory practices, CCPs should accept to clear transactions executed in different venues, to the extent that those venues comply with the operational and technical requirements established by the CCP. Generally, the Commission should continue to closely monitor the evolution of the OTC derivatives market and should, where necessary, intervene in order to prevent such competitive distortions from occurring in the Internal Market.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 21

(21) In order to identify the relevant classes of ~~OTC~~ derivatives that should be subject to the clearing obligation, the thresholds and systemically relevant non-financial counterparties, reliable data is needed. Therefore, for regulatory purposes, it is important that a uniform ~~OTC~~ derivatives data reporting requirement is established at Union level.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 22

(22) It is important that market participants report all details regarding ~~OTC~~ derivative contracts they have entered into to trade repositories. As a result, information on the risks inherent in ~~OTC~~ derivatives markets will be centrally stored and easily accessible to ESMA, the relevant competent authorities and the relevant central banks of the ESCB.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 27

(27) As this Regulation introduces a legal obligation to clear through specific CCPs for regulatory purposes, it is essential to ensure that those CCPs are safe and sound and comply at all times with stringent organisational, conduct of business and prudential requirements established by this Regulation. They should apply to the clearing of all financial instruments CCPs deal with, regardless of the trading arrangements (trading venue or bilateral agreement) under which they are initially concluded, in order to ensure a uniform application.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 29

(29) Direct rules regarding the authorisation and supervision of CCPs are an essential corollary to the obligation to clear OTC derivatives. It is appropriate that national competent authorities in conjunction with ESA (ESMA) should retain the responsibility for all aspects of the authorisation and the supervision of CCPs, including the verification that the applicant CCP is compliant with this Regulation and with Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems27 , in view of the fact that those national competent authorities remain best placed to examine how the CCPs operate on a daily basis, to carry out regular reviews and to take appropriate action, where necessary.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 31

(31) It is necessary to reinforce provisions on exchange of information between competent authorities and to strengthen the duties of assistance and cooperation between them. Due to increasing cross- border activity, competent authorities should provide each other with the relevant information for the exercise of their functions so as to ensure the effective enforcement of this Regulation, including in situations where infringements or suspected infringements may be of concern to authorities in two or more Member States. For the exchange of information, strict professional secrecy is needed. It is essential, due to the wide impact of ~~OTC~~ derivative contracts, that other relevant authorities, such as tax authorities and energy regulators, have access to information necessary to the exercise of their functions.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 36

(36) Clients of clearing members that clear their ~~OTC~~ derivatives with CCPs should be granted a high level of protection. The actual level of protection depends on the level of segregation that those clients choose. Intermediaries should segregate their assets from those of their clients. For this reason, CCPs should keep updated and easily identifiable records.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 38

(38) Margin calls and haircuts on collateral may have procyclical effects. CCPs and competent authorities and ESA (ESMA) should therefore adopt measures to prevent and control possible procyclical effects in risk management practices adopted by CCPs, to the extent that a CCP's soundness and financial security is not negatively affected.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 42

(42) Interoperability arrangements are important tools for greater integration of the post-trading market within the Union and regulation should be provided for. However, interoperability arrangements may expose CCPs to additional risks. Given the additional complexities involved in an interoperability arrangement between CCPs clearing OTC derivative contracts, it is appropriate at this stage to require a grace period of 5 years between receiving clearing authorisation for derivatives and eligibility to apply for authorisation for interoperability as well as to restrict the scope of subsequent interoperability arrangements to cash securities. However, by 30 September 2014, ESMA should submit a report to the Commission on whether and when an extension of that scope to other financial instruments would be appropriate.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 50

(50) The Commission should be empowered to adopt delegated acts in accordance with Article 290 of the Treaty in respect of the details to be included in the notification to ESMA and in the register and the criteria for the decision of ESMA on the eligibility for the clearing obligation, on the ~~information and~~ clearing threshold, on criteria for the objective identification of the use of derivatives for hedging activities and criteria for identifying the use of derivatives for regulatory arbitrage, on risk assessment, on types of markets for which a more detailed level of segregation of assets and positions should be offered to clients on the maximum time lag regarding the contract, on liquidity, on the minimum content of governance rules, on details of record keeping, on minimum content of business continuity plan and the services guaranteed, on ~~percentages and time horizon for margin requirement~~details of establishment and operation of default funds, on percentages and time horizon for margin requirements and minimum margin requirements and calibration standards, on extreme market conditions, on highly liquid collateral and haircuts and minimum collateral standards, on highly liquid financial instruments and concentration limits, on details for performance of tests, on appropriate limits on re-hypothecation on details concerning the application of a trade repository for registration with ESMA, on fines and on details concerning the information that a trade repository should make available, as referred to in this Regulation. In defining the delegated acts, the Commission should make use of the expertise of the relevant European Supervisory Authorities (ESMA, EBA and EIOPA). In view of the expertise of ESMA regarding issues concerning securities and securities markets, ESMA should play a central role in advising the Commission on the preparation of the delegated acts. However, where appropriate, ESMA should consult closely with the other two European Supervisory Authorities.

2011/03/30
Committee: ECON

Proposal for a regulation
Recital 52

(52) Since the objectives of this Regulation, namely to lay down uniform requirements for ~~over-the-counter (OTC)~~the mandating of clearing and reporting of derivative contracts and to also lay down uniform requirements for the performance of activities of central counterparties and trade repositories, cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1

1. This Regulation lays down uniform requirements for derivative contracts set out in Annex I Section C numbers (4) to (10) of Directive 2004/39/EC that are traded over-the-counter, on a multilateral trading facility or on a regulated market and lays down uniform requirements for the performance of activities of central counterparties and trade repositories.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 2

2. This Regulation shall apply to central counterparties and their trading members, financial counterparties and to trade repositories. It shall apply to non- financial counterparties where so provided.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 5 a (new)

(5 a) ‘commodity derivatives’ means derivatives contracts that share the common essential characteristic that the underlying assets are non-financial;

2011/03/30
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 5 b (new)

(5 b) "regulated market" means a multilateral system as defined in Article 4(1)(14) of Directive 2004/39/EC;

2011/03/30
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 5 c (new)

(5 c) "multilateral trading facility (MTF)" means a multilateral system as defined in Article 4(1)(15) of Directive 2004/39/EC;

2011/03/30
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – subparagraph 1

A financial counterparty and a non financial counterparty as referred to in article 7(2) shall clear all OTC derivative contracts which are considered eligible pursuant to Article 4 and are concluded with other financial counterparties and a non financial counterparty as referred to in article 7(2) in the relevant CCPs listed in the register as referred to in Article 4(4).

2011/03/30
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – subparagraph 1 a (new)

There shall be no clearing obligation in the case of derivative contracts between subsidiary undertakings of the same parent company or between a parent company and a subsidiary undertaking. ‘Parent companies’ and ‘subsidiary companies’ for the purposes of this provision shall be companies thus defined under the relevant EU rules. This derogation shall not affect the reporting obligation under Article 6 or the obligations in relation to risk mitigation techniques under Article 8. The exemptions shall only apply where the parent company concerned has first notified the competent authority of its home Member State, in writing that they intend to make use of the exemption. The notification shall be made not less than thirty calendar days before the use the exemption. The competent authority shall ensure that the exemption is only used for derivative contracts that fulfil all of the following conditions : (a) derivative contracts between subsidiary undertakings of the same parent company or between a parent company and a subsidiary undertaking are justified for economic reasons (b) the use of the exemption does not increase systemic risk in the financial system (c) there are no legal restrictions to capital flows between the subsidiary undertakings of the same parent company or between the parent company and the subsidiary undertaking.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – subparagraph 2

That clearing obligation shall also apply to financial counterparties and to the non- financial counterparties referred to in Article 7(2) which enter into eligible ~~OTC~~ derivative contracts with third country entities.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 4 – paragraph 1

1. Where a competent authority has authorised a CCP to clear a class of derivatives under Article 10 or 11, it shall immediately notify ESMA of that authorisation and request a decision on the eligibility for the clearing obligation referred to in Article 3. This obligation also applies to the competent authority in a third country with regard to classes of derivatives for which a CCP in that third country has been authorised to provide services to clients established in the Union.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 4 – paragraph 3 – subparagraph 1 – point d

~~(d) ability of the CCP to handle the volume of contracts;~~deleted

2011/03/30
Committee: ECON

Proposal for a regulation
Article 4 – paragraph 3 – subparagraph 1 – point e

~~(e) level of client protection provided by the CCP.~~deleted

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 1 – subparagraph 1

Financial counterparties shall report to a trade repository registered in accordance with Article 51 the details of any OTC derivative contract they have entered into that is not handled by a CCP and any modification or termination. Contracts handled by a CCP should be reported directly by the CCP. The details shall be reported no later than the ~~working~~business day following the execution, clearing, or modification of the contract.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 1 – subparagraph 2 a (new)

Each counterparty to a derivative contract shall report the contract independently such that the two sides of the transaction can be reconciled by the trade repository.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 2

2. Where a trade repository is not able to record the details of an OTC derivative contract, financial counterparties shall report the details of their positions in those contracts to the competent authority designated in accordance with Article 48 of Directive 2004/39/EC. The details to be reported to the competent authority shall be at least those that would be reported to the trade repository.deleted

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 4 – subparagraph 1

Powers are delegated to the Commission to determine the details and type of the reports referred to in paragraphs 1 and 2 for the different classes of derivatives as well as criteria and conditions for retrospective reporting of outstanding derivative contracts entered into prior to the entry in force of the regulation.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 4 – subparagraph 2 – point b a (new)

(b a) for derivatives that do not conform to a standard format there shall be a placeholder format permitting competent authorities to detect the existence of such a trade at take any required regulatory measures

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 4 – subparagraph 2 – point b b (new)

(b b) a unique contract identifier

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 4 – subparagraph 4

ESMA shall develop draft regulatory technical standards for submission to the Commission by 30 June 2012. Where the draft regulatory technical standards concern wholesale energy products within the meaning of the Regulation on energy market integrity and transparency (COM(2010) 726/3) ESMA shall consult the Agency for the Cooperation of Energy Regulators (ACER).

2011/03/30
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 5 – subparagraph 2

ESMA shall develop draft implementing technical standards for submission to the Commission by 30 June 2012.Where the draft implementing technical standards concern wholesale energy products within the meaning of the Regulation on energy market integrity and transparency (COM(2010) 726/3) ESMA shall consult the Agency for the Cooperation of Energy Regulators (ACER).

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 1 – subparagraph 1

Where a non-financial counterparty takes positions in OTC derivative contracts that exceed the information threshold to be determined pursuant to paragraph 3(a), it shall notify the competent authority designated in accordance with Article 48 of Directive 2004/39/EC thereof, providing justification for taking those positions.deleted

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 1 – subparagraph 2

~~That~~A non-financial counterparty shall be subject to the reporting obligation set out in Article 6(1).

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 2 – subparagraph 1

Where a non-financial counterparty takes positions in ~~OTC~~ derivative contracts ~~exceeding the clearing~~such that the average position over 90 days exceeds the threshold to be determined pursuant to paragraph 3(b), it shall be subject to the clearing obligation set out in Article 3 with regard to all its eligible ~~OTC~~ derivative contracts.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 3 – subparagraph 1 – point a

Powers are delegated to the Commission to adopt regulatory technical standards specifying~~: (a) the information threshold; (b) the clearing treshol~~ the clearing threshold. deleted

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 3 – subparagraph 2

Those thresholds shall be determined taking into account the systemic relevance of the sum of net positions and exposures by counterparty per class of derivatives as well as criteria identified in article 4(3) or any other criteria identified by the Commission after involvement of any relevant competent authorities for the non financial undertaking such as the Agency for the Cooperation of Energy Regulators (ACER).

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 4

4. In calculating the positions referred to in paragraph 2, OTC derivative contracts entered into by a non-financial counterparty that are objectively measurable as directly linked to reducing the market and credit risk to which the commercial activity of that counterparty is exposed shall not be taken into account. Powers are delegated to the Commission to adopt regulatory technical standards specifying criteria for the determination of whether a derivative is directly linked to reducing the market and credit risk to which the commercial activity of a counterparty is exposed. The draft regulatory standards referred to in paragraph 1a shall be adopted in accordance with Articles [7 to 7d] of Regulation …/… [ESMA Regulation]. ESMA shall submit drafts for those regulatory standards to the Commission by 30 June 2012.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 4 a (new)

4 a. Powers are delegated to the Commission to adopt regulatory technical standards specifying criteria for the determination of whether a derivative is directly linked to reducing the market and credit risk to which the commercial activity of a counterparty is exposed. The draft regulatory standards referred to in paragraph 1a shall be adopted in accordance with Articles [7 to 7d] of Regulation …/… [ESMA Regulation]. ESMA shall submit drafts for those regulatory standards to the Commission by 30 June 2012.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 1 – subparagraph 1 – introductory part

Financial counterparties or the non- financial counterparties referred to in Article 7(2), that enter into a~~n OTC~~ derivative contract not cleared by a CCP, shall ensure with due diligence that appropriate prudential procedures and arrangements are in place to measure, monitor and mitigate operational, market and credit risk, including at least:

2011/03/30
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 1 – subparagraph 1 – point a

(a) ~~where possible,~~ electronic means ensuring the timely confirmation of the terms of the OTC derivative contract;

2011/03/30
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 1 – subparagraph 1 a (new)

The ESA (ESMA) shall regularly monitor the activity in derivatives not eligible for clearing in order to identify cases where a particular class of contracts may pose systemic risk. The ESA (ESMA) after consultation with ESRB shall take action in order to prevent the further accumulation of contracts in such a class.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 1 – subparagraph 2 a (new)

The competent authority and ESA (ESMA) shall ensure that prudential procedures and arrangements aim to prevent regulatory arbitrage between cleared and non-cleared derivative transactions and reflect risk transfers arising from derivatives contracts. ESA (ESMA) and competent authorities shall revise margin standards in order to prevent regulatory arbitrage in conformity with provisions of article 37.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 2 – subparagraph 1

Powers are delegated to the Commission to adopt regulatory technical standards specifying guidelines for appropriate prudential procedures and arrangements and margin standards referred in paragraph 1, as well as the maximum time lag between the conclusion of an OTC derivative contract and the confirmation referred to in paragraph 1(a).

2011/03/30
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1

Where a CCP that is a legal person established in the Union and has access to adequate liquidity intends to perform its services and activities, it shall apply for authorisation to the competent authority of the Member State where it is establishedAn entity established in the Union that intends to act as a CCP shall apply for a credit institution authorisation to the competent authority of the Member State where it is established in accordance with Article 6 of Directive 2006/48/EC. The authorisation shall follow the procedure under Article 13, be granted if the applicant fully complies with the provisions laid down in Title IV and be limited to clearing activities as defined under article 2.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 12 – paragraph 1

1. A CCP shall have a permanent, available and separate initial capital of at least EUR 510 million to be authorised pursuant to Article 10.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 12 – paragraph 2

2. Capital, together with retained earnings and reserves of a CCP, shall at all times be proportionate to the size and the risk involved in the CCP and be sufficient to ensure an orderly winding- down or restructuring of the activities over an appropriate time span and that the CCP is adequately protected against operational and residual risks.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 12 – paragraph 3 – subparagraph 3

The ESA (ESMA) shall, in close cooperation with ESA (EBA) and the European System of Central Banks (ESCB) and in consultation with EBA, submit a draft to the Commission for those regulatory technical standards by 30 June 2012.

2011/03/30
Committee: ECON

Sven GIEGOLD, Pascal CANFIN

Proposal for a regulation
Article 13 – paragraph 1

1. ~~The competent authority~~ESMA shall only grant authorisation where it is fully satisfied that the applicant CCP complies with all the requirements set out in this Regulation, the requirements adopted pursuant to Directive 98/26/EC~~, and following the joint positive opinion of the college referred to in Article 15 and the opinion of ESMA.~~

2011/03/30
Committee: ECON

Proposal for a regulation
Article 13 – paragraph 1

1. The competent authority shall only grant authorisation where it is fully satisfied that the applicant CCP complies with all the requirements set out in this Regulation, the requirements adopted pursuant to Directive 98/26/EC, and following the joint positive opinion of the college referred to in Article 15 a~~nd the opinion of ESMA~~s well as the positive opinion of ESA (ESMA) and if provided the opinion of ESA (EBA) and the Central bank of issue.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 3 – subparagraph 2 a (new)

If a majority of the members of the college considers that the competent authority of the Member State of establishment of the CCP is not exercising its responsibilities in an appropriate manner and that it constitutes a threat to financial stability, the college shall immediately notify ESA (ESMA) of any breach in the supervision of the CCP. ESA (ESMA) shall issue a decision as to whether it considers the supervision by the competent authority of the Member State of establishment of the CCP to be appropriate and constitutes a threat to financial stability. If ESA (ESMA) considers that a the supervision is inappropriate, ESMA may impose corrective measures on competent authorities.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 3 a (new)

3 a. Powers are delegated to the Commission to adopt regulatory technical standards specifying the risk assessment referred to in Article 14 paragraph 2 and Article 15 paragraph 1. The regulatory technical standards referred to in the first subparagraph shall be adopted in accordance with Articles [7 to 7d] of Regulation …/… [ESMA Regulation]. The ESA (ESMA) shall, in close cooperation with the European System of Central Banks (ESCB) and in consultation with EBA, submit a draft to the Commission for those regulatory technical standards by 30 June 2012.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 16 – paragraph 1 a (new)

1 a. The procedure for the decision to withdrawal authorisation shall require a joint positive opinion of the same college as referred to in the original authrorisation as well as a positive opinion from ESMA.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 16 – paragraph 3 a (new)

3 a. The competent authority shall ensure the orderly execution of the necessary procedures for the transfer or settlement of the assets of members' or clients' related to derivatives subject to the clearing obligation which the withdrawal of authorisation renders the CCP unable to clear

2011/03/30
Committee: ECON

Proposal for a regulation
Article 16 – paragraph 3 b (new)

3 b. The withdrawal of authorisation shall be effective for the entire territory of the Union.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 17 – paragraph 2

The review and evaluation shall have regard to the size, systemic importance, nature, scale and complexity of the activities of the CCP as well as criteria identified in article 4(3).

2011/03/30
Committee: ECON

Sven GIEGOLD, Pascal CANFIN

Proposal for a regulation
Article 18 – paragraph 1

~~1. Each Member State shall designate~~Competent authorities Competent authorities ESA (ESMA) is the competent authority responsible for carrying out the duties resulting from this Regulation for the authorisation, supervision and oversight of CCPs established in its territory and shall inform the Commission and ESMA thereof. Where a Member State designates more than one competent authority, it shall clearly determine the respective roles and shall designate a single authority to be responsible for co-ordinating co-operation and the exchange of information with the Commission, ESMA and other Member States’ competent authorities in accordance with Articles 19 to 22the EU.

2011/03/30
Committee: ECON

Sven GIEGOLD, Pascal CANFIN

Proposal for a regulation
Article 18 – paragraph 2

Competent authorities Competent authorities 2. Each Mmember State shall ensure that ~~the competent authorities have th~~ESMA have supervisory and investigatory powers necessary for the exercise of their functions.

2011/03/30
Committee: ECON

Sven GIEGOLD, Pascal CANFIN

Proposal for a regulation
Article 18 – paragraph 4

~~4. ESMA shall publish a list of the competent authorities designated in accordance with paragraph 1 on its websi~~Competent authorities Competent authorities delete.d

2011/03/30
Committee: ECON

Proposal for a regulation
Article 19 – paragraph 1

1. Competent authorities shall cooperate closely with each other, with the ESA (ESMA), ESA (EBA) and with ~~ESMA~~the ESCB.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 21 – paragraph 3

3. ESMA shall transmit confidential information relevant to the performance of their tasks, including relevant information relating to third country CCPs providing clearing services as referred to in Article 23 and trade repositories maintaining data as stipulated in Article 63, to the competent authorities responsible for the supervision of the CCPs. Competent authorities and other relevant authorities shall communicate the necessary information for the exercise of their duties set out in this Regulation to ESMA and other competent authorities.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 22

The competent authority or any other authority shall inform ESMA, the ~~college~~ESCB and ESRB and other relevant authorities without undue delay of any emergency situation relating to a CCP, including developments in financial markets, which may have an adverse effect on market liquidity and the stability of the financial system in any of the Member States where the CCP or one of its clearing members are established. In case of emergency, ESA (ESMA) in close cooperation with ESA (EBA) the ESCB and ESRB, shall secure and coordinate intervention to mitigate any impact on the orderly functioning of the Union's financial markets while ensuring equal treatment of CCPs.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 23 – paragraph 2 – point c a (new)

(c a) the third country applies reciprocal access conditions for EU based CCPs and a mutual recognition regime has been implemented in that third country.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 23 – paragraph 2 – point c b (new)

(c b) the conditions imposed on third countries' CCPs shall preserve a level playing field between European CCPs and third countries' CCPs.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 25 – paragraph 2 – subparagraph 1

A CCP shall have a board of which at least ~~one third~~half, but no less than two, of its members are independent. The compensation of the independent and other non-executive members of the board shall not be linked to the business performance of the CCP.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 26 – paragraph 1

1. A CCP shall establish a risk committee, which shall be composed of ~~representatives of its clearing members and independent members of the board~~various groups of representatives, including representatives of its clearing members, the clients of its clearing members, independent experts and representative of the competent authority of the CCP provided that client representatives are different of clearing member representatives. Independent experts and representative of the competent authority of the CCP shall have a majority on this body. The risk committee may invite employees of the CCP to attend risk committee meetings in a non-voting capacity. The advice of the risk committee shall be independent from any direct influence by the management of the CCP.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 1 – subparagraph 1 – point d a (new)

(d a) whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, the costs to clients, adaptability, resilience or level of service of the system of CCPs in the Union may be adversely affected

2011/03/30
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 6 – point a

(a) another CCP, a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm, market operator, an operator of a security settlement system, a UCITS management company or an AIFM authorised in another Member State;

2011/03/30
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 6 – point b

(b) the parent undertaking of another CCP, a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm, market operator, an operator of a security settlement system, a UCITS management company or an AIFM authorised in another Member State;

2011/03/30
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 6 – point c

(c) a natural or legal person controlling another CCP, a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm, market operator, an operator of a security settlement system, a UCITS management company or an AIFM authorised in another Member State.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 1 a (new)

1 a. A CCP shall establish, implement and maintain an adequate procedure ensuring the timely and orderly settlement or transfer of clients' assets in the event of a withdrawal of authorisation consequent to a decision under article 16.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 36 – paragraph 3 a (new)

3 a. A CCP shall publicly disclose any breaches by clearing members of the criteria referred to in Article 35 paragraph 1 and paragraph 2.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 37 – paragraph 1

1. A CCP shall ~~keep~~have in place records and accounts that shall enable it, at any time and without delay, to identify and segregate the assets and positions of one clearing member from the assets and positions of any other clearing member and from its own asset, systems and procedures to ensure that, upon a pre-defined trigger event, the assets and positions of solvent and non-defaulting clearing members and their clients, and the assets and positions of clients of a defaulting clearing member, can be determined and are protected against losses arising from such defaulting clearing member to the extent possible. Accordingly such assets and positions shall be dealt with in accordance with the provisions of this Article, the default procedures of the CCP as required by Article 45 and in accordance with this Regulation generally. Member States shall ensure that their insolvency laws include derogations sufficient to allow CCPs to meet the objectives and requirements of these provisions.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 37 – paragraph 2

2. A CCP shall require each clearing member to distinguish and segregate in accounts with the CCP the assets and positions of that clearing member from those of its clients. A CCP shall allow clients to have a more detailed segregation of their assets and positions. The CCP shall publicly disclose the risks and costs associated with the different levels of segregation. The CCP shall require the clearing members to inform their clients of these risks and costs. The CCP shall require the clearing members to receive a written agreement from their clients confirming their decision not to have a detailed segregation of their assets and positions and to ensure that their clients are aware of the risks associated with that choice.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 37 – paragraph 3

3. Depending on the level of segregation chosen by a client, the CCP shall ensure that it is able to transfer on request at a pre- defined trigger event, without the consent of the clearing member and within a pre- defined transfer period ~~its~~the assets of that client and positions to another clearing member. Th~~at other clearing member shall only be obliged where it has previously entered~~e decision whether or not to effect the transfer upon request shall remain with the CCP, and shall be made into a cco~~ntractual relationship for that purpose~~rdance with the default procedures of the CCP pursuant to Article 45.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 37 – paragraph 5 a (new)

5 a. Power shall be conferred on the Commission to adopt regulatory technical standards specifying the types of markets for which a more detailed level of segregation of assets and positions should be offered to clients, having regard to the costs and benefits of doing so. The standards shall be adopted pursuant to Articles 10 to 14 of Regulation (EU) No. 1095/2010. ESA (ESMA) shall submit draft versions of these technical regulatory standards to the Commission by 30 June 2012.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 1

1. A CCP shall impose, call and collect margins to limit its credit exposures from its clearing members, and where relevant, from CCPs which have interoperable arrangements. Competent authorities shall ensure that CCPs respect minimum margin standards as specified in paragraph 5. These minimum standards shall be calibrated in accordance with the risk level and shall be regularly revised to reflect current market conditions and in particular in response to emergency situations where it is concluded that doing so will mitigate systemic risks. Such margins shall be sufficient to cover potential exposures that the CCP estimates will occur until the liquidation of the relevant positions. They shall be sufficient to cover losses that result from at least 99.5 per cent of the exposures movements over an appropriate time horizon and they shall ensure that a CCP fully collateralises its exposures with all its clearing members, and where relevant with CCPs which have interoperable arrangements, at least on a daily basis.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 1 – subparagraph 1 (new)

Specific margin requirements shall be defined by competent authorities and ESA (ESMA) for commodity derivatives taking proper account of stocks to consumption ratios and ratios of aggregated notional value of contracts to outstanding aggregated market value of underlying assets.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 1 – subparagraph 2 (new)

In accordance with Article 9(5) of Regulation …/… [ESMA Regulation]. ESA (ESMA) may recalibrate margin requirements in emergency situations when doing so will mitigate systemic risk.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 2

2. A CCP shall adopt models and parameters in setting its margin requirements that capture the risk characteristics of the products cleared and take into account the interval between margin collections, market liquidity and the possibility of changes over the duration of the transaction. The models and parameters shall be validated by the competent authority and subject to a joint opinion of the college referred to in Article 15. Competent authorities shall assess, in particular, that such models are adequate with respect to the volatility and continuity of margin requirements in case of adverse or extreme but plausible market conditions as well as potential slippage effects and its consequences for net present values of contracts.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 5 – subparagraph 1

Powers are delegated to the Commission to adopt regulatory technical standards specifying the minimum margin requirements and calibration standards as well as the appropriate percentage and time horizon, as referred to in paragraph 1, to be considered for the different classes of financial instruments.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 40 – paragraph 3 a (new)

3 a. Powers are delegated to the Commission to adopt regulatory technical standards specifying the details of establishment and operation of default funds referred to in paragraphs 1 and 3. Those regulatory technical standards shall be adopted in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. The regulatory technical standards referred to in the first subparagraph shall be adopted in accordance with Articles [7 to 7d] of Regulation …/… [ESMA Regulation]. ESMA, in consultation with EBA, shall submit drafts for those regulatory technical standards to the Commission by 30 June 2012.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 1

1. A CCP shall only accept highly liquid collateral with minimal credit and market risk to cover its exposure to its clearing members. Competent authorities shall ensure that CCPs respect minimum collateral standards as specified in paragraph 3. These minimum collateral standards shall be calibrated in accordance with the risk level and shall be regularly revised to reflect current market conditions and in particular in response to emergency situations where it is concluded that doing so will mitigate systemic risks. It shall apply adequate haircuts to asset values that reflect the potential for their value to decline over the interval between their last revaluation and the time by which they can reasonably be assumed to be liquidated. It shall take into account the liquidity risk following the default of a market participant and the concentration risk on certain assets that may result in establishing the acceptable collateral and the relevant haircuts.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 1 a (new)

1 a. In accordance with Article 9(5) of Regulation …/… [ESMA Regulation]. ESA (ESMA) may recalibrate collateral standards in emergency situations if required to mitigate systemic risk.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 43 – paragraph 3 – subparagraph 1

Powers are delegated to the Commission to adopt regulatory technical standards specifying minimum collateral standards as well as the type of collateral that can be considered highly liquid and the haircuts referred to in paragraph 1.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 44 – paragraph 2

2. Financial instruments posted as margins shall be deposited with operators of securities settlement systems that ensure non-discriminatory access to CCPs and the full protection of those instruments. A CCP shall have prompt access to the financial instruments when required. CCPs shall have robust controls over the re- hypothecation of clearing members' collateral following limits defined by the Commission.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 44 – paragraph 5 – subparagraph 1

Powers are delegated to the Commission to adopt regulatory technical standards specifying the highly liquid financial instruments referred to in paragraph 1 limits for rehypotheation and the concentration limits referred to in paragraph 4.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 45 – paragraph 1

1. A CCP shall have procedures in place to be followed where a clearing member does not comply with the requirements laid down in Article 35 within the time limit and according to the procedures established by the CCP. The CCP shall outline the procedures to be followed in the event the insolvency of a clearing member is not established by the CCP. The procedures shall be approved by the competent authority following the positive opinion of ESMA

2011/03/30
Committee: ECON

Proposal for a regulation
Article 45 – paragraph 3

3. The CCP shall promptly inform the competent authority. That competent authority shall immediately inform the authority responsible for the supervision of the defaulting clearing member where the CCP considers that the clearing member will not be able to meet its future obligations and when the CCP intends to declare its default. The implementation of default procedures shall be carried on only after an approval of the competent authority of the CCP following the positive opinion of ESMA and the positive opinion of the college.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 46 – paragraph 1

1. A CCP shall regularly review the models and parameters adopted to calculate its margin requirements, default fund contributions, collateral requirements and other risk control mechanisms. ~~It shall subject the models to rigorous and frequent stress tests to assess~~ The robustness and plausibility of model outputs shall be tested by stressing the input parameters and any otheir ~~resilience in~~model assumptions to reflect extreme but plausible market conditions and member or client-related events and the CCP shall perform regular back tests to assess the reliability of the methodology adopted. The CCP shall inform the competent authority of the results of the tests performed and shall obtain its validation before adopting any change to the models and parameters.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 46 – paragraph 2 a (new)

2 a. Competent authorities shall regularly stress test the exposure of financial undertakings to the default of CCPs as well as other counterparties for non cleared derivative contracts.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 46 – paragraph 4 – subparagraph 3

ESMA, in consultation with EBA, and the ESCB when the opinion is provided shall submit drafts on those regulatory technical standards to the Commission by 30 June 2012.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 47 – paragraph 1

1. A CCP shall, ~~where available,~~ use central bank money to settle its transactions. ~~Where central bank money is not accessible, steps shall be taken to strictly limit credit and liquidity risks.~~

2011/03/30
Committee: ECON

Proposal for a regulation
Article 50 – paragraph 2

2. The competent authorities shall only grant approval of the interoperability arrangement, where the CCPs involved have been authorised to clear under the procedure set out in Article 13, and have continuously fulfilled their role in clearing the derivative contracts under that authorisation in accordance with supervisory requirements for a period of at least 5 years, the requirements set out in Article 49 are met and the technical conditions for clearing transactions under the terms of the arrangement allow for a smooth and orderly functioning of financial markets and that the arrangement does not undermine the effectiveness of supervision.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 60 – paragraph 2 a (new)

2 a. ESMA shall take all necessary steps to ensure the orderly substitution of the trade repository from which registration has been withdrawn including the transfer of data to other trade repositories and the redirection of reporting flows to other trade repositories

2011/03/30
Committee: ECON

Proposal for a regulation
Article 66 – paragraph 1 a (new)

1 a. A trade repository may only use the data that it receives under this Regulation for commercial purposes if the entity providing the data has provided its written consent.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 67 – paragraph 1

1. A trade repository shall publish aggregate positions by class of derivatives on the contracts reported to it. Trade repositories shall ensure that all the competent authorities have direct access to such details of OTC derivative contracts as they require in order to carry out their tasks.

2011/03/30
Committee: ECON

Proposal for a regulation
Article 67 – paragraph 4 – subparagraph 1

Powers are delegated to the Commission to adopt regulatory technical standards specifying the details of the information referred to in paragraphs (1) and (2) as well as operational standards required in order to aggregate and compare data across repositories.

2011/03/30
Committee: ECON