On January 8, the European Securities and Markets Authority (ESMA) published its first annual review of the colleges required to be established under Article 18 of the European Market Infrastructure Regulation (EMIR). The colleges are established for the purpose of reviewing and approving applications by central counterparties (CCPs) for authorization to clear one or more classes of financial instruments under EMIR.
College participants include ESMA and the applicant’s national competent authority, as well as the competent authorities responsible for supervising the applicant’s clearing members, trading venues, central securities depositories and other CCPs with which the applicant maintains interoperability arrangements. In 2014, 15 CCPs were authorized under EMIR.
Article 30 of Regulation (EU) No 1095/2010 requires that ESMA annually review the supervisory activities of the national competent authorities participating in the CCP college, including, in particular, an assessment of the degree of convergence reached in the application of EMIR’s provisions and in supervisory practices across the national competent authorities.
Based on its review, ESMA was satisfied that the activities of the CCP colleges were characterized by cooperation and a commitment to meeting relevant deadlines. However, ESMA noted that certain members appeared to “free ride” on the substantive reviews undertaken by other, more active members, and certain college chairpersons appeared not to share relevant information promptly with other college members.
The report also includes a discussion of ESMA’s role in facilitating the work of the CCP colleges, including the publication of guidelines and recommendations on written agreements between members of CCP colleges and clarifications on the voting procedures of CCP colleges. ESMA also identified certain substantive areas where applicants for CCP authorization were required to modify certain of their business or risk management practices in order to maintain a consistent application of EMIR across the European Union.