Clearing of over-the-counter (OTC) derivatives is an essential part of the financial market infrastructure, and performs a critical risk-hedging function catering to the need of market participants. As a response to the financial crisis, central clearing has also added greater safety and transparency in the financial sector. Nevertheless, many concerns related to the concentration of risk remain.
In December 2022, the European Commission proposed the review of the European Market Infrastructures Regulation (EMIR 3.0). The objective is to make the EU clearing landscape more attractive, resilient, and to broaden access to liquidity. The proposal includes simplifications in terms of authorisation and intragroup exemptions, as well as requirements that would ensure additional transparency and predictability of central counterparty (CCP) risk models. In addition, EMIR 3.0 would expand the scope of competences of the European Securities and Markets Authority’s (ESMA) CCP Supervisory Committee, and enhance the tools promoting supervisory convergence. To this end, the proposal is an essential review of the CCP regulatory and supervisory framework.
However, the risk of creating competitive disadvantages for EU firms remains. Some of the most contentious issues are the proposed Pillar 2 prudential measures, as well as the requirement on active accounts. EU-based banks will now need to double accounts from the main financial centres, and face a cost disadvantage.
Recent years have been marked by significant difficulties for financial markets: during the 2020 pandemic, equity markets faced unprecedented volatility; while with Russia’s invasion to Ukraine in 2022, the commodities markets experienced high volatility and price levels; on top of that, the macroeconomic environment has been marked by high inflation and low economic growth. Despite these challenges, the derivatives ecosystem have proven to be resilient.
On the occasion of the recently published book, Clearing OTC Derivatives in Europe (Bas Zebregs, Victor de Serière, Patrick Pearson, and Rezah Stegeman (Eds.) – Oxford University Press 2023), the Centre for European Policy Studies (CEPS) and the European Capital Markets Institute (ECMI) jointly invite you to this half-day conference.
More speakers to be confirmed.
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