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Firstly, EFAMA believes that it is still very early in the implementation process to exercise such a review at the current time of the legislative process. Some key components of the EMIR framework, such as the definition of the regime of collateral management are not yet completed. However, these technical issues are also likely to become the most contentious ones. Therefore, EFAMA hopes that a similar opportunity for review will be organized once the next level of implementing measures are applied.
Secondly, even if EFAMA sees the benefits of EMIR in terms of control of the systemic risk, EFAMA deems it crucial for funds and asset managers to be subject to a fair and appropriate treatment. In this perspective, a robust solution needs to be found for the margining issues. Otherwise, the application to funds and asset managers of the EMIR rules will not be in favor of the reduction of systemic risk in the financial system and will affect long term investments and increase the costs for end‐investors.
This would indeed be caused by the higher costs, immobilisation of assets and loss of return on cash collateral.
Lastly, EFAMA urges the European Commission to review the EMIR legislation with the objective of maintaining the liquidity in the financial markets. The most important impacts are: The higher liquidity risk and a liquidity squeeze since more liquid assets are needed as collateral for derivatives transactions; and the higher risk of defaulting counterparties due to the lack or insufficient availability of eligible assets to deliver for collateralization purpose.