2020/11/23

The European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) – together, the European Supervisory Authorities (ESAs) - published draft regulatory technical standards (RTS) amending the delegated regulation on the risk mitigation techniques for over-the-counter (OTC) derivatives not cleared by a central counterparty (CCP) (bilateral margin requirements) under the European Market Infrastructure Regulation (EMIR). The ESMA also published a final report with new draft RTS proposing to amend the three delegated regulations on the clearing obligation under EMIR. The amendments included in these draft RTS propose to extend the temporary exemption for 18 months for intragroup transactions. The bilateral margin and clearing obligation regulations originally introduced temporary exemptions for intragroup transactions with third-country group entities to facilitate centralised risk-management procedures for groups, while the relevant equivalence decisions are being assessed. The amendments included in the draft RTS on bilateral margins propose extending the temporary exemption for single-stock equity options or index options (equity options) for three years. The bilateral margin delegated regulation originally introduced a temporary exemption for equity options to facilitate international regulatory convergence of risk-management procedures. The draft RTS reintroduce a regulatory solution to support the preparations for the end of the Brexit transition period, allowing UK counterparties to be replaced with EU counterparties without triggering the bilateral margin and clearing obligation requirements under certain conditions. This limited exemption would ensure a level playing field between EU counterparties and the preservation of the regulatory and economic conditions under which the contracts were originally agreed. Counterparties should start negotiating as soon as possible the novation of their transactions that fall under the scope of these amending regulations, given the twelve-month timeframe to benefit from this measure.

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