The Financial Markets Law Committee (FMLC) published a paper on issues of legal uncertainty arising in the context of indirect clearing of exchange traded derivatives under MiFIR.  The paper identifies issues of legal uncertainty that arise in the context of the draft RTS consulted on by the ESMA in December 2014 and examines the requirement for a clearing member to establish procedures for the default of a client that include "steps … to initiate the return of the liquidation proceeds to the indirect client". The FMLC explains that the effect of this provision is to require a clearing member to make payments of collateral to an indirect client (leapfrog payments) in the event of a default by a direct client. The FMLC is concerned that the requirement may conflict with existing insolvency laws of member states, as well as any insolvency rules in third countries to which a direct client may be subject. ESMA has sought to deal with this in recital 5 of the draft RTS by providing that the RTS provisions will override any conflicting laws of a member state. The FMLC is uncertain whether this is possible and requests that ESMA clarifies the relevant provisions of the draft RTS with regard to the indirect clearing arrangements.