ESMA letter to the Commissioner for Financial Services, Financial Stability and the Capital Markets Union, European Commission
The conclusion of this assessment is that PSAs are largely operationally ready. While ESMA is supportive of continuing efforts to improve further PSAs’ ability to source cash to meet variation margin calls in all possible scenarios, in particular in stressed market conditions, a mix of solutions is available to PSAs, including sponsored cleared repo models, such that there are less reasons to treat PSAs differently than other funds. ESMA is thus of the view that the exemption first introduced in 2012 and that was meant to be temporary, should stop. In other words, the clearing obligation should start applying to PSAs.
The full letter is available at https://www.esma.europa.eu/sites/default/files/library/esma70-451-110_letter_to_the_ec_-_clearing_obligation_for_psas.pdf