The content is aimed at competent authorities to ensure that their supervisory activities are converging along the lines set out in ESMA’s responses. It should also help investors and other market participants by providing clarity on EMIR’s requirements.
Sample question (see link for complete list):
Article 46 of EMIR – collateral requirements and recording of client assets:
What is the requirement on a CCP for the recording financial instruments posted to it as margins, default fund contributions or contributions to other financial resources? Is it possible for a CCP to record the value assigned to financial instruments post-haircut?
Answer:
Article 46(1) of EMIR sets out the purpose of haircuts by making reference to the ‘potential’ for the value of the assets posted as collateral to decline. In order to adequately apply haircut requirements set-out in Article 46(1), a CCP needs to have procedures enabling the record of the pre-haircut value of financial instruments actually posted to the CCP by clearing members for their own account or the account of their clients. This is consistent with recording requirements set out in Article 14(3) of Commission Delegated Regulation No 2013/153.
This concept is therefore not compatible with a situation where the CCP would have procedures providing for just the record of this post-haircut value and where it would routinely impose such a decline in full in respect of every financial instrument that is posted to the CCP at the expense of clients.
Q&A
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