The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation paper to review the European Market Infrastructure Regulation’s (EMIR) requirements on anti-procyclicality (APC) margin measures for central counterparties (CCPs).
ESMA is seeking input from stakeholders on a potential review of its Regulatory Technical Standards (RTS) with the aim of harmonising the existing APC margin measures for CCPs as well as specific anti-procyclicality tools.
Nicoletta Giusto, Independent Member of the CCP Supervisory Committee, said:
“The turmoil in global markets following the onset of the COVID-19 pandemic in 2020 has been a live test of the operational resilience of CCPs and the adequacy of their regulatory and supervisory framework. This has prompted us to re-examine our anti-procyclicality tools.
‘’Our Consultation Paper sets out proposed amendments to the EMIR RTS that aim to further harmonise CCP policies on margin changes as well as the use of anti-procyclicality margin tools across the EU. The proposals result from in-depth research and stakeholder engagement and we believe that, if implemented, they will strengthen the resilience of the EU financial system as a whole.”
While ESMA’s data show that EU CCPs have overall performed well during the early stages of the COVID-19 crisis, the surge in initial margin has raised questions as to whether some of these increases acted in a procyclical manner, potentially causing, or even, amplifying liquidity stress in other parts of the financial system.
The deadline for responses to the consultation paper is 31 March 2022. Stakeholders will have the opportunity to attend to a public hearing organised by ESMA on 17 March 2022.