FIA Europe Assesses Derivatives Reforms

Terry Flanagan

FIA Europe has published a review of the cumulative effect of European derivatives law reform, setting out the core issues and offering potential solutions to encourage further debate.
The aim of the white paper is to assist key legislative and regulatory bodies in addressing inconsistencies and unintended consequences brought about by a range of current and proposed European derivatives regulations.

Among the core recommendations in the paper are amending the Leverage Ratio under Basel III to recognize the exposure-reducing effect of segregated margin; exempting exchange-traded derivatives from the pre-execution and straight-through processing checks under MiFIR; greater harmonization of cross-border regulation; removing the Emir reporting obligation with respect to exchange-traded derivatives; changing the dual-sided Emir reporting regime to a single-sided regime; and consolidating all of the existing derivatives reporting obligations into a single EU regulation.

“Of all the recommendations contained in this paper, the most critical one is that the leverage ratio under Basel III should be amended to recognize the exposure-reducing effect of segregated margin,” said FIA Europe’s CEO Simon Puleston Jones. “Without that important change, the viability of clearing under EMIR is significantly at risk.”

Separately, FIA Global, in cooperation with the law firms Linklaters and Milbank, Tweed, Hadley & McCloy, has launched an interactive tool to compare and assess the rules of central counterparties (CCPs) within the CCP Risk Review.

The CCP Risk Review is a guide to the complex and frequently-updated rules governing CCPs and their associated services. Subscribers to the CCP Risk Review can view up-to-date responses to questions on CCP policies and procedures in a simple, standardized format at www.ccpriskreview.org. With the launch of the interactive online tool, subscribers can create custom reports that detail the precise variables of interest to their organization.

“The CCP Risk Review custom reporting tool will make it easy for clearing members and other users to quickly compare, analyze, and understand policies across CCPs and their services,” said Jackie Mesa, executive director of FIA Global, in a release. “We’ve created a clean, user-friendly interface that enables subscribers to access current rules and create custom, tailored reports in seconds, saving hours of time on research. Firms who subscribe to the CCP Risk Review can use this tool to get a timely, accurate and detailed picture of CCP risk and risk management procedures.”

The CCP Risk Review currently has detailed information on more than 30 CCPs and their associated services, with more CCPs being added on a rolling basis.

The CCP Risk Review is designed for use by a broad range of market participants, including clearing members of CCPs, clients of clearing members, CCPs, professional advisers and regulators.

Current subscribers to the CCP Risk Review include ten of the largest clearing members globally, who use the tool to evaluate and compare evolving regulatory obligations.

The custom reporting feature of the CCP Risk Review is supported by HighQ Publisher, an integrated digital publishing and content marketing platform from HighQ, a provider of enterprise collaboration and publishing software.

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