FIA: Relocation not necessary for enhanced central counterparty oversight

The FIA submitted has  comments to the European Commission (EC) regarding Part 2 of the EMIR Review Proposal. The comments address the regulation and oversight of central counterparties and the EC’s proposals to enhance supervision of these entities.

FIA’s submission builds on earlier comments cautioning against forced relocation of euro clearing, detailed in a June letter to EC Vice President Valdis Dombrovskis.

“We support the EC’s commitment to ensuring third country CCPs are appropriately supervised as part of a well-regulated central clearing system,” said Walt Lukken, president and CEO of FIA. “However, forced relocation of clearing could distort markets, fragment liquidity, and raise costs for market participants globally. The EC can better achieve the goal of improving the oversight of third country CCPs by updating its proven equivalence regime and enhancing the supervision for CCPs that are systemically important in the EU.”

FIA makes 23 recommendations that would allow for this enhanced supervision without distorting markets. FIA’s recommendations include allowing the recognition of CCPs at the service level; enhancing the use of reliance on equivalent rules as part of the EU’s oversight of systemically important third country CCPs; clarifying ESMA’s role in the oversight of these systemically important third country CCPs; and improving transitional arrangements so that market participants have time to adapt to new regulatory and supervisory arrangements.