On January 27, the European Securities and Markets Authority (ESMA) wrote an open letter (Letter) to the European Commission (EC) to ask it to consider a number of issues relating to its supervisory and sanctioning powers under the European Market Infrastructure Regulation (EMIR). This request is in the context of the ongoing review of EMIR launched in 2015 by the EC (see the Corporate & Financial Weekly Digest edition of May 22, 2015 for more information). The Letter also addresses similar issues related to credit rating agencies.

The Letter reinforces the importance of ESMA’s previous position taken in relation to the review of EMIR. Part of the Letter focuses on trade repositories (TRs), and identifies the following aspects of reform considered essential to ensure that ESMA is seen as a credible supervisor: (1) strengthening ESMA’s sanctioning powers and the level of TR fines; (2) enhancing the tools available to ESMA to supervise TRs; (3) adding requirements for TRs relating to data quality and access; and (4) further reporting requirements.

More generally in relation to EMIR, ESMA reinforces the importance of: (1) considering amendments to the clearing obligation framework; (2) redefining, simplifying and recalibrating the categories of large and small non-financial counterparties and the obligations to which each of the two categories are subject; (3) improving transparency and predictability of margin requirements; and (4) reconsidering the third country central counterparty clearing house recognition framework.

The Letter is available here.