On 9 September 2016, the Joint Committee of the European Supervisory Authorities (ESAs) published their opinion on the draft regulatory technical standards on margin requirements for OTC derivatives transactions that are not cleared (RTS).

The European Commission had proposed a series of amendments to the RTS in July 2016, but these have been largely rejected by the ESAs. In particular, the ESAs have stated that:

  • they do not agree with the Commission’s proposals on concentration limits for pension schemes;
  • the threshold used in looking at a counterparty’s exposure to counterparties in third countries where legal enforceability of netting agreements or collateral protection cannot be ensured should include both legacy and new derivatives transactions;
  • central counterparties should not be required to post or collect margin in respect of non-centrally cleared derivatives that they enter into;
  • the treatment of counterparties outside the EU needs to be clarified in the RTS; and
  • the application of the RTS for intra-group transactions should be delayed for six months to allow competent authorities time to consider applications for exemptions from the margin requirements. Without this delay, counterparties entering into such transactions would have to post margin whilst its application for exemption was being considered.

A further draft of the RTS is appended to the opinion which the Commission is invited to accept.