On July 28, 2015, the European Systemic Risk Board published two reports on issues to be considered in the review of the European Market Infrastructure Regulation which the European Commission is responsible for conducting by August 17, 2015. The first report is on the efficiency of margining requirements to limit pro-cyclicality and the need to define additional intervention capacity in the area. The report focuses on margins and haircut setting for CCPs because the technical standards on margin for uncleared derivatives is not yet final. The report notes that there has only been a short period during which CCPs have been authorized under EMIR and the implementation of the margining and haircut requirements by those CCPs. During that time, no significant evidence of pro-cyclical implications has emerged. The ESRB considers that the legal framework under EMIR can be improved in this area and recommends the European Commission to consider: (i) binding guidance on the three options available to a CCP for taking into account potential pro-cyclicality of margin requirements; and (ii) a less flexible framework for calibrating collateral haircuts so that EMIR provides for a minimum length for the look-back periods to be taken into account when estimating stress or pre-defined minimum haircuts. The ESRB also proposes: (i) that CCPs should be required to prepare an overall tolerance for pro-cyclicality policy; (ii) that CCPs should be subject to more granular transparency requirements for procyclicality; (iii) adding the definition of pro-cyclicality used in the Principles for Financial Market Infrastructures to give a consistent reference point for the term under EMIR; and (iv) a further review of EMIR in 2018 which would focus on the macroprudential use of margining and haircuts to address and prevent systemic risks. In the second report, which considers the full scope of EMIR, the ESRB recommends the following to be taken into account in the review of EMIR: (i) a swift process for removal or suspension of mandatory clearing requirements; (ii) that the systemic risks for mandatory clearing should be evaluated by the European Securities and Markets Authority; (iii) the replenishment of default funds and the skin-in-the-game design under EMIR as well as at an international level; (iv) that CCPs should publish quantitative and qualitative requirements in line with the international disclosure requirements; (v) that ESMA should publish a list of approved interoperability arrangements; and (vi) broader access rights for national regulators to trade repository data.

 The first report is available at: http://www.esrb.europa.eu/pub/pdf/other/150729_report_procyclicality.en.pdf?2e5b1d15ecbda152c481b1b8eb0dd030 and the second report is available at: http://www.esrb.europa.eu/pub/pdf/other/150729_report_other_issues.en.pdf?05e93e72da533b04101f8fc6b973e1bf.