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The European Securities and Markets Authority (ESMA) has published a revised opinion on its draft Regulatory Technical Standard (RTS) on the clearing obligation for Interest Rate Swaps (IRS).
ESMA’s draft IRS RTS had originally been sent for endorsement to the European Commission by 1 October 2014. On 29 January 2015, the Commission responded with a corrigendum notification, which informed ESMA of its intention to endorse the draft RTS with amendments.
This opinion revises ESMA’s earlier opinion published on 29 January 2015. However, besides incorporating practical issues raised by the Commission corrigendum notification, the revised opinion does not introduce material changes compared to the original opinion nor were the actual draft IRS RTS modified.
ESMA agrees with the ultimate objectives of the modifications that the European Commission intends to introduce. However, ESMA considers that the tool proposed by the Commission for the matter related to the non-EU intra group transactions is not appropriate from a legal perspective and, in the case that the Commission intention is to define a later application date for those transactions, ESMA stands ready to explore, in coordination with the Commission, a different manner to incorporate that provision.
ESMA backs the modifications on the frontloading section, though has a few observations and improvements with respect to several recitals.
ESMA proposes to apply the 8 billion threshold to investment funds for the definitions of types of counterparties at a fund level. To that effect, a specific provision has been added in the text of the RTS.