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EU ministers compromise on Emir

Wednesday 25 January 2012 - by Andrew Hickley

 European finance ministers have broken a stalemate on new OTC derivatives regulations after finding common ground in the European Council.

Officials in Brussels struck a deal on Tuesday ensuring that national authorities will have the right to authorise clearing houses in their countries, unless they face large-scale opposition from neighbouring jurisdictions.

If two-thirds of the Council of the European Union vote that a member state should not authorise a central clearing counterparty, the European Securities and Markets Authority will be at liberty to decide if it should be permitted to operate.

The UK had previously campaigned for national supervisors alone to decide whether CCPs should be authorised.

CCPs stand between two parties in a trade, ensuring that either side will be paid should the other party default.

The measures will now have to be negotiated with the European Parliament before the rules can come into force.


Speaking at a press conference announcing the agreement, internal market commissioner Michel Barnier lauded the council's measures as a "dynamic compromise".

"The role of supervision of these CCPs which are going to be of growing importance because clearing is going to be generalised," he said.

The council's agreement would also see pension schemes being exempt from a clearing obligation for three years, extendable by up to another three years depending on reports justifying this exclusion.

Additionally, CCPs from countries outside the EU will only be allowed to operate in the region if their regulations are deemed to be equivalent to the European regime.

Barnier added: "These clearing houses will be the new institutions which will be too big to fail, so there will be systemic risks involved and that is why the conditions in setting these up and the conditions for their supervision within the single market are very important."

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Email: andrew.hickley@gfsnews.com


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