Both ISDA and the ECB have recently published comments on the legislative proposal issued by the European Commission earlier this year (see here) which aims to change the level 1 text of EMIR. The proposal includes issues relating to Non Financial Counterparties, in particular:
- “Compulsory” delegated reporting when certain Non Financial Counterparties (NFC) trade bilaterally with a Financial Counterparty(FC).
- Removal of the requirement to report trades between internal entities if one of them is an NFC.
- Removal of the final backloading requirement of EMIR, currently scheduled for February 2019.
- A requirement that CCPs report Exchange Traded Derivatives.
- A simplification of the process and calculation around the clearing threshold.
ISDA’s comments, which can be found here, express some concerns at the compulsory delegation proposal, on the basis that there is still data that needs to be transferred from the NFC to the FC. Their preference is to move to a single sided reporting regime, similar to the Dodd Frank Act in the US and the FMIA in Switzerland.
The ECB’s comments, which can be found here, include some concerns regrading the removal from cope of reporting internal trades where one of the parties is an NFC. The concern relates to a possible lack of transparency in groups when transferring risk from one entity to another.
Last month Europex also issued comments on the proposal (see here).