EN Official Journal of the European Union C 60/1

OPINION OF THE EUROPEAN CENTRAL BANK

of 27 November 2012

on various draft regulatory and implementing technical standards submitted by the European Securities and Markets Authority to the Commission to be adopted by means of Commission delegated and implementing regulations supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories

(CON/2012/95)

2013/C 60/01

Introduction and legal basis

On 8 November 2012, the European Central Bank (ECB) received a request from the Commission for an opinion on the draft regulatory technical standards (hereinafter the ‘draft RTS’) and draft implementing technical standards (hereinafter the ‘draft ITS’) submitted by the European Securities and Markets Authority (ESMA) to the Commission and to be adopted in accordance with Articles 10 to 15 of Regulation (EU) No 1095/2010 (1) by means of:

(a) a Commission delegated regulation (EU) No …/… supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 with regard to regulatory technical standards on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, risk mitigation techniques for OTC derivatives contracts not cleared by a CCP (hereinafter the ‘draft RTS on clearing obligation and risk mitigation’);

(b) a Commission delegated regulation (EU) No …/… supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 with regard to regulatory technical standards on colleges for central counterparties (hereinafter the ‘draft RTS on colleges for central counterparties’);

(c) a Commission delegated regulation (EU) No …/… supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 with regard to regulatory technical standards on requirements for central counterparties (hereinafter the ‘draft RTS on requirements for central counterparties’);

(d) a Commission delegated regulation (EU) No …/… supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to regulatory technical standards on the minimum details of the data to be reported to trade repositories (hereinafter the ‘draft RTS on the minimum details of data to be reported to trade repositories’);

(e) a Commission delegated regulation (EU) No …/… supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories, with regard to regulatory technical standards specifying the data to be published and made available by trade repositories and operational standards for aggregating, comparing and accessing the data (hereinafter the ‘draft RTS on the data to be published and made available by trade repositories and operational standards for aggregating, comparing and accessing the data’);

(f) a Commission implementing regulation (EU) No …/… laying down implementing technical standards with regard to the format and frequency of trade reports to trade repositories according to Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories (hereinafter the ‘draft ITS on the format and frequency of trade reports to trade repositories’)

(collectively referred to as the ‘draft regulatory and implementing standards’).

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union, since the draft regulatory and implementing standards contain provisions affecting, in particular, the task of the European System of Central Banks (ESCB) to promote the smooth operation of payment systems, as well as its contribution to the smooth conduct of policies relating to the stability of the financial system, its conduct of foreign-exchange operations and its holding and management of the official foreign reserves of the Member States, as referred to in Article 127(2) and (5) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this Opinion.

1. General observations

1.1. On 13 January 2011, the ECB issued Opinion CON/2011/1 on a proposal for a regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories (2) in which it highlighted, inter alia, that central banks have a statutory role and responsibilities to safeguard financial stability as well as for the safety and efficiency of financial infrastructures. The final text of Regulation (EU) No 648/2012 has accordingly emphasised the role of the ESCB in promoting the smooth operation of payment systems and requires ESMA to develop draft technical standards in close cooperation with the ESCB (3).

1.2. The ECB has been very closely involved in ESMA’s work on the technical standards in respect of central counterparties and trade repositories and welcomes ESMA’s cooperation in taking most of the ECB’s comments into account in the draft regulatory and implementing standards. Generally, the ECB is supportive of ESMA’s final draft technical standards and considers them well balanced and in line with the CPSS-IOSCO Principles for financial market infrastructures (4). Nevertheless, the ECB wishes to comment on and suggest amendments in relation to some of the most crucial issues, including the issues relevant to the ECB where Regulation (EU) No 648/2012 does not require the ESCB to be involved in ESMA’s preparatory work.

2. Specific observations

2.1. The ECB welcomes the provision of the draft RTS on clearing obligation and risk mitigation (5) which specifies the elements ESMA should take into consideration in order to assess the degree of standardisation of the contractual terms and operational processes of the relevant class of OTC derivatives subject to clearing. Indeed, this provision adds clarity to the concept of ‘standardisation’ itself. This is essential in order to improve the transparency of OTC derivatives markets, reduce systemic risk and improve financial stability, as advocated by the G20 leaders (6). Nonetheless, it is important to ensure that the focus on standardisation of contractual terms does not offer incentives for market participants to refrain from the process of contractual standardisation, in order to avoid introducing a mandatory clearing obligation. In this respect, the ECB also emphasises ESMA’s mandate to: (a) monitor the activity in derivatives which are not eligible for clearing, in order to identify cases where a particular class of derivatives may pose systemic risk; and (b) prevent regulatory arbitrage between cleared and non-cleared derivative transactions (7).

2.2. Further, the ECB notes that Article 1(4) of Regulation (EU) No 648/2012 provides that the Regulation should not apply to: (a) the members of the ESCB; (b) other Member States’ bodies performing similar functions; and (c) other Union public bodies charged with or intervening in the management of the public debt which includes both clearing and reporting obligations (8). However, requiring the counterparties of the members of the ESCB to report all data on their transactions to the trade repositories would limit the effectiveness of the above exemption. To prevent Regulation (EU) No 648/2012 from limiting the power of ESCB members to perform their tasks of common interest, it is crucial that, in particular, the books of ESCB members are protected and that signalling based on central bank operations remains effective. This could be most effectively ensured if not only ESCB members are exempt from the obligation to report on their derivatives transactions, but also ESCB members’ counterparties to those transactions.

2.3. The ECB notes that cash deposits made through standing deposit facilities or other comparable means provided for by a central bank may be denominated either in the currency issued by that central bank (i.e. ‘central bank money’) or in another currency not issued by that central bank (i.e. ‘commercial bank money’) and therefore may have a different risk profile. This fact should be reflected in a central counterparty’s investment policy by different treatment of such deposits and may have to be taken into account on the occasion of the next review of Regulation (EU) No 648/2012.

Where the ECB recommends that the draft regulatory and implementing standards are amended, specific drafting proposals are set out in the Annex accompanied by explanatory text to this effect.

Done at Frankfurt am Main, 27 November 2012. The President of the ECB Mario DRAGHI

(1) OJ L 331, 15.12.2010, p. 84.

(2) OJ C 57, 23.2.2011, p. 1.

(3) See recital 11 and Articles 26(9), 34(3), 41(5), 42(5), 44(2), 45(5), 46(3), 47(8), 49(4), 54(4), 81(5) of Regulation (EU) No 648/2012.

(4) Available at the website of the Bank for International Settlements at: http://www.bis.org

(5) Article 6.

(6) See, in particular, the G20 Toronto Summit Declaration of 26 and 27 June 2010 available at: http://canadainternational.gc.ca

(7) Articles 11(13) and 5(3) of Regulation (EU) No 648/2012.

(8) Article 1(4) of Regulation (EU) No 648/2012.