On July 28, 2016, The European Commission published a letter to the Joint Committee of the European Supervisory Authorities (ESAs) informing them that it intends to endorse, with amendments, the draft regulatory technical standards (RTS) on risk mitigation techniques for OTC derivative contracts not cleared by a central counterparty (CCP) under Article 11(15) of EMIR. The Commission also published the revised text of the draft RTS, together with the accompanying annexes.
The letter highlights that the Commission intends to make several clarifications and to restructure the legal text of the draft RTS. The changes include:
- introducing a recital containing reasoning for the delayed phase-in of the requirements for equity options;
- clarification that EU counterparties wishing to rely on the intragroup exemption may submit their application after the RTS enter into force;
- clarification that cash initial margin may be held with equivalent third country institutions (as well as with authorized EU credit institutions);
- clarification that requirements relating to foreign exchange (FX) contracts should start to apply from the date of application of the relevant Delegated Act under the MiFID II framework, as opposed to the date of entry of this Delegated Regulation; and
- changes to one provision relating to concentration limits for pension scheme arrangements.
The ESAs now have six weeks to amend the draft RTS and resubmit them to the Commission in the form of a formal opinion.