ESMA consults on reporting change for third-country CCP rates clearing

The European Securities and Markets Authority (ESMA) on Tuesday launched a consultation on a proposed annual reporting framework under European Market Infrastructure Regulation (EMIR) for clearing activity at recognised third-country central counterparties (CCPs).

The draft regulatory technical standards aim to significantly enhance supervisory oversight regarding EU firms' clearing exposures at recognised third-country central counterparties (CCPs).

“The objective is to provide supervisory authorities with a structured and consistent overview of the scale, characteristics and risk profile of EU firms' exposures to recognised third-country CCPs, contributing to the broader monitoring framework established under EMIR 3,” ESMA said in a statement on Tuesday.

A central theme of ESMA’s proposal is avoiding duplicate reporting. Following feedback from national competent authorities (NCAs), regulators conceded that much of the required data is already captured under existing regimes such as EMIR, Securities Financing Transactions Regulation (SFTR) and Markets in Financial Instruments Regulation (MiFIR).

To address these concerns, ESMA’s framework prioritises reusing data already collected through existing channels. The watchdog has limited new data collection to gaps not covered by the current framework.

This comes after ESMA in June published its final report on the simplification of transaction reporting, following a review that confirmed dual-sided reporting, frequent and unsynchronised regulatory changes as key drivers of cost and complexity for European firms.

One of the more significant challenges identified by ESMA involves non-EU subsidiaries of EU-supervised groups.

Non-EU subsidiaries are not directly required to submit reports themselves. However, if they are part of a group subject to consolidated supervision in the EU, their clearing activity in recognised third-country CCPs must be included in the consolidated report submitted by the Union parent undertaking.

The framework proposed that union parent entities and clearing participants will submit annual metrics covering cleared instrument types, annual average values by Union currency, collected margins, default fund contributions, and peak payment obligations.

Under the draft RTS, additional reporting would concentrate on three areas: types of financial and non-financial instruments cleared, annual average values cleared per Union currency and asset class; and collected margins, default fund contributions, and peak payment obligations.

“Once implemented, the new requirements will establish a harmonised approach to reporting clearing activity at recognised third-country CCPs,” ESMA said in the statement.

The regulator has invited comments from stakeholders on the reporting framework, templates and format by October 12.

Following the consultation, ESMA will assess the responses received and prepare a final report.

Meanwhile, ESMA in July published its ‘Final Report’ containing draft RTS on the elements to be considered when a CCP establishes its admission criteria and assesses the ability of non-financial counterparties (NFCs) acting as clearing members to meet margin requirements and default fund contributions.

Speaking on the International Swaps and Derivatives Association's (ISDA’s) The Swap podcast, published last month, ESMA chair Verena Ross said that Europe must build on common supervision framework rather than adopt US approach.