European Securities and Markets Authority
Interest Rate Swaps Clearing Obligation
On January 29th, the European Securities and Markets Authority (“ESMA”) published an opinion on the draft Regulatory Technical Standards on the Clearing Obligation on Interest Rate Swaps. While the opinion generally supports the European Commission’s amendments, it raises some concerns on the process for exempting non EU intragroup transactions from the clearing obligation.
On January 22nd, ESMA added the Athens Exchange Clearing House to its list of authorized central counterparties and on January 9th, reauthorized CME Clearing Europe for extended CCP activities and services.
On January 9th, ESMA published updated guidance in the form of frequently asked questions and answers. Document 2015/11 addresses the application of the Alternative Investment Fund Managers Directive. Document 2015/12 discusses the guidelines on exchangetraded funds and other Undertakings for Collective Investment in Transferable Securities issues.
European Banking Authority
Bank Recovery and Resolution Directive
On January 30th, the European Banking Authority (“EBA”) made available on its interactive website the EBA's Technical Standards and Guidelines associated with the Bank Recovery and Resolution Directive (“BRRD”). Using the interactive tool, users can submit questions on the application of the BRRD. EBA Press Release.
On January 23rd, the EBA amended its final draft Regulatory Technical Standards on Prudent Valuation to replace the term “volatility” in Article 9 and Article 10 of the final draft Regulatory Technical Standards with the term “variance” for the purposes of computing market price uncertainty and closeout costs additional valuation adjustments. The amendment affects only institutions using the Core approach and results in a slight relaxation of the calibration of the volatility test performed under these two articles.
Resolution Planning Proposals
On January 14th, the EBA opened a consultation on draft Implementing Technical Standards for resolution planning procedures, forms, and templates. The forms and templates cover the minimum required information on institutions' organizational structure, governance and management, critical functions and core business lines, critical counterparties, structure of liabilities, funding sources, offbalance sheet, payment systems, information systems, interconnectedness, authorities, and legal framework. Comments should be submitted on or before April 14th, 2015. EBA Press Release.
European Central Bank
On January 30th, Reuters summarized the comments of Andreas Dombret, an executive board member of Germany’s Bundesbank, concerning the European Central Bank (“ECB”)’s role and the coordination of the ECB’s supervision with that of national regulators. Dombret commented on the speed with which the system had been created and stated that “[people] should not expect everything to run smoothly from day one… [as it will] take some time before every detail is worked out.” Comments.
Survey of Credit Terms and Conditions
On January 23rd, the ECB published the results of its December 2014 survey of credit terms and conditions in eurodenominated securities financing and overthecounter derivatives. The survey found only limited changes in credit terms for most counterparty types, a decrease in overall marketmaking activities by large banks, and a growing role for nonbank financial institutions. ECB Press Release.
Capital Markets Union
On January 28th, the European Commission opened its project to create a Capital Markets Union (“CMU”) for all 28 Member States by removing barriers to crossborder investment and lowering costs of funding within the EU. A key objective of the CMU will be to diversify and extend sources of funding so that businesses have easier access to credit through capital markets as well as banks. EC Press Release.
Spanning the Derivatives Divide
On January 27th, Reuters recounted the comments of Olivier Guersent, European Commission Deputy Director General, concerning the crossborder application of derivatives trading rules. Discussions between the U.S. and E.U. are progressing and an agreement could be reached soon. Building Bridges.