ECON committee debate on European Market Infrastructure Regulation
02 February 2011
Rapporteur Werner Langen (DE, EPP) explained his position on EMIR. His draft report has not been made available yet. Many MEPs said that it was difficult to have a first exchange of views without having read the draft report.
Langen will hand in his report in German tomorrow evening to the ECON secretariat. He stressed that he does not support the Council deletion of “OTC” because not all derivatives should be covered under EMIR. He argued that since the Dodd-Franck-Act just deals with OTC derivatives EU would be creating a competitive distortion if it covered all derivatives in Europe. He also explained that it has not been possible to stick to the initial timetable due to the high quantity of input he has received. He mentioned that he just received three briefing papers from the shadow rapporteurs and that they need to be analyzed and debated. Langen proposes around 100 amendments to the EC proposal in his draft report.
Concerning the exemptions, he mentioned that public banks which are 100% state owned and provide regional support should also be exempted. On pension funds he said that this issue should be debated and maybe some external experts should be consulted. He said that Energy trading is already under the supervision of the sectoral authority and should not be covered under EMIR. Some types of derivatives used by insurers should also be considered for a possible exemption. Subsidiaries should also be exempted if they present a consolidated balance sheet and if the parent company owned at least 50 % of the subsidiary.
Langen also proposes that once the counterparty reaches the threshold it will have 6 months to meet its clearing obligation. The additional clearing of existing contracts should just include those derivatives that have 2 years maturity to the date the contract starts.
On the CCPs authorization issues, he proposes to simplify the process and that CCPs should be authorized by the national authority where the CCP has its headquarter. ESMA will make sure that there is not arbitrage between Member States.
Furthermore, Langen proposes to delete EMIR’s Title V dealing with interoperability and to have a look at this in the future. On the transaction register (Trade repositories) he mentioned that a sensible compromise on this should be found. Access to important data need to be guaranteed.
Shadow rapporteurs:
Leonardo Domenici (IT, S&D) agreed to a great extent with what Mr Langen said. He mentioned the possibility to organize a public hearing, preferably before the deadline for amendments (15 March). He agreed with Langen that the deletion of OTC from the text is not a good idea. As regards the exemptions, he agrees that one should not have general across the board exemptions. It would be good to work on qualitative and quantitative criteria to deal with the problem of threshold. Domenici added that the recent development in the derivatives commodities markets deserves a careful consideration from the ECON committee and maybe to be included under EMIR.
Sharon Bowles (UK, ALDE) raised concerns on how the Commission will deal with the interaction between CRD IV and EMIR on the collateral to be posted on non-centrally cleared OTC derivatives contracts. She also recalled on the importance of the exemption for pension funds as well as for the treasury activities of non-financial corporates.
Pascal Canfin (FR, Greens) asked Langen on his opinion on the access to Central Bank liquidity by CCPs. He agreed with Domenici on the need to tackle commodities derivatives.
Kay Swinburne (ECR, UK) disagreed with Langen on the need to keep the word “OTC” in the regulation. She argued that after MiFID II, there will be very little OTC derivatives transactions because most of the OTC transactions will stop existing as such. Most OTC will be traded under a regulated exchange platform and therefore will not be OTC anymore. On the backloading issue, she is against a retrospective interpretation of the law. Finally she mentioned that access to crucial data streams should be accessible to all CCPs.
Langen concluded by saying that a hearing could be organized after the deadline for amendments and that he agrees that commodities should be looked at, but it would be better to wait for the Commission proposal on this.
Next Steps:
· Presentation of the report: 28 February
· Deadline for amendments: 15 March
· Consideration on the amendments: 4 April
· Vote in ECON: 20 April
· Vote in Plenary: June
