13 Amendments of Matt CARTHY related to 2017/0136(COD)
Amendment 108 #
Proposal for a regulation
Recital 1
Recital 1
(1) Regulation (EU) No 648/2012 of the European Parliament and of the Council46 requires standardised OTC derivatives contracts to be cleared through a Central Counterparty (CCP) in line with similar requirements in other G20 countries. That Regulation also introduced strict prudential, organisational and business conduct requirements for CCPs and established arrangements for their prudential supervision in order to minimise risks to users of a CCP and underpin financial stability. While the increase in central clearing is welcome in that it manages risks to the financial system more effectively than bilateral clearing, the CCP system presents new risks to the financial system. The massive amounts of funds involved, the extreme concentration of the clearing market, and its complexity and interconnectedness, combine to pose serious and systemic risks, while supervision, competition and recovery and resolution mechanisms have not kept up with the rapid pace of the market’s development. __________________ 46 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L201, 27.7.2012, p.1).
Amendment 110 #
Proposal for a regulation
Recital 2
Recital 2
(2) Since the adoption of Regulation (EU) No 648/2012, the volume of CCP activity in the Union and globally has grown rapidly in scale and in scope. The expansion in CCP activity is set to continue in the coming years with the introduction of additional clearing obligations and the rise in voluntary clearing by counterparties not subject to a clearing obligation. The Commission’s proposal of 4 May 201747 to amend Regulation (EU) No 648/2012 in a targeted manner, to improve its effectiveness and proportionality, will create further incentives for CCPs to offer central clearing of derivatives to counterparties and facilitate access to clearing to small financial and non- financial counterparties. Deeper and more integrated capital markets resulting from the Capital Markets Union (CMU) willManaging and reducing the massive systemic risks posed to financial stability by OTC derivatives further increases the need for cross-border clearing in the Union, thus further increasing the importance and the interconnectedness of CCPs within the financial system. __________________ 47 Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories, COM/2017/0208 final.
Amendment 115 #
Proposal for a regulation
Recital 3
Recital 3
(3) The number of CCPs currently established in the Union and authorised under Regulation (EU) No 648/2012 remains relatively limited, standing at 17 in June 2017. 28 third-country CCPs have been recognised under the equivalence provisions of that Regulation, allowing them also to offer their services to clearing members and trading venues established in the Union48 . Clearing markets are well integrated across the Union but highly concentrated in certain asset classes and highly interconnected. Euro clearing is highly concentrated in the City of London, where ever year British-based CCPs process around €1,300 billion of euro-denominated trades. The concentration of risk makes the failure of a CCP a low- probability but a potentially extremely high-impact event. In line with the G20 consensus, the Commission adopted a proposal for a Regulation on CCP Recovery and Resolution49 in November 2016 to ensure that authorities are appropriately prepared to address a failing CCP, safeguarding financial stability and limiting taxpayer costs. __________________ 48 In accordance with Regulation (EU) No 648/2012, ESMA provides a list of the third-country CCPs that have been recognised to offer services and activities in the Union. The third-country CCPs are established in 15 countries covered by CCP equivalence decisions adopted by the Commission, including Australia, Hong Kong, Singapore, Japan, Canada, Switzerland, South Korea, Mexico, South Africa and the US CFTC, Brazil, UAE, Dubai International Financial Centre (DIFC), India and New Zealand. 49 Proposal for a Regulation of the European Parliament and of the Council on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, and (EU) 2015/2365. COM(2016) 856 final.
Amendment 127 #
Proposal for a regulation
Recital 8 a (new)
Recital 8 a (new)
(8a) The potential high correlation between euro clearing activity and monetary policy means it is in the interests of the citizens of the EU and the Eurozone for euro-clearing to be primarily based in the eurosystem where it can be subject to full EU supervision. The striking down of the ECB’s ‘location policy’ (which required CCPs with at least €5 billion in daily exposure to be located in the eurosystem) by the EU General Court was not based on an assessment of the substance of the policy, which aimed to manage systemic risk.
Amendment 130 #
Proposal for a regulation
Recital 9
Recital 9
(9) In view of the global nature of financial markets and of the need to address inconsistencies in the supervision of Union and third-country CCPs, ESMA’s legally binding ability to promote convergence in the supervision of CCPs should be enhanced. In order to confer new roles and responsibilities on ESMA, Regulation (EU) No 1095/2010 of the European Parliament and of the Council establishing a European Supervisory Authority (ESMA)53 should be amended. __________________ 53 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p.84
Amendment 134 #
Proposal for a regulation
Recital 10
Recital 10
(10) A specific Executive Session (“CCP Executive Session”) should be created within the Board of Supervisors of ESMA to handle tasks related to CCPs in general, and supervise Union and third- country CCPs in particular, including relocation decisions or requirements. In order to guarantee a smooth establishment of the CCP Executive Session, it is necessary to clarify its interactions with the Board of Supervisors of ESMA, its organisation and the tasks it should perform.
Amendment 156 #
Proposal for a regulation
Recital 17
Recital 17
(17) In order to ensure transparency and democratic control, as well as to safeguard the rights of the Union institutions, the Head and the two Directors of the CCP Executive Session shouldall be accountable to the European Parliament and to the Council for anyll decisions taken on the basis of this Regulation.
Amendment 170 #
Proposal for a regulation
Recital 21
Recital 21
(21) While national competent authorities continue to exercise their current supervisory responsibilities under Regulation (EU) No 648/2012, the prior consent of ESMA should be required for certain decisions in order to promote consistency in the supervision of CCPs throughout the Union, and being conscious of the issue of interdependencies between the clearing system and the broader financial system. A specific mechanism is introduced for cases of disagreement between ESMA and the national competent authorities. Similarly, there is a need to better reflect the mandates of the central banks of issue concerning their monetary policy responsibilities, due to the potential risks that the malfunctioning of a CCP could pose to the implementation of the monetary policy of the Union and the promotion of the smooth operation of payment systems. Therefore, the prior consent of the relevant central banks of issue should be required on certain decisions envisaged by national competent authorities, in particular when it relates to a CCP’s payment and settlement arrangements and related liquidity risk management procedures for the transactions denominated in that central bank of issue’s currency.
Amendment 175 #
Proposal for a regulation
Recital 24
Recital 24
(24) A significant amount of financial instruments denominated in the currencies of the Member States are cleared by recognised third-country CCPs. This will increase substantially when the United Kingdom withdraws from the Union and the CCPs established there will no longer be governed by the requirements of this Regulation. Cooperation arrangements agreed in the supervisory colleges will no longer be subject to the safeguards and procedures of this Regulation, including the Court of Justice of the European Union. This implies significant challenges for Union and Member State authorities in safeguarding financial stabilitye withdrawal of Britain from the EU poses special and severe risks to the euro- clearing system due to the fact the overwhelming majority of euro-clearing takes place in the City of London. Removing EU supervision and oversight rights in this regard will significantly limit the ability of EU authorities to gain necessary information and take any required action, and requires a fundamental revision of current practice.
Amendment 178 #
Proposal for a regulation
Recital 25
Recital 25
(25) As part of its commitment to integrated financial markets, the Commission should continue to determine by way of equivalence decisions that the legal and supervisory frameworks of third countries fulfil the requirements of Regulation (EU) No 648/2012. In order to enhance the implementation of the current equivalence regime in relation to CCPs, the Commission should be able to, if necessary, specify further the criteria for assessing the equivalence of third-country CCP regimes. It is also necessary to empower ESMA with the supervision of regulatory and supervisory developments in those third-country CCP regimes that have been deemed equivalent by the Commission. This is in order to ensure that the equivalence criteria and any specific conditions set for their use continue to be satisfied by third countries. ESMA should report its findings to the Commission on a confidential basis.
Amendment 181 #
Proposal for a regulation
Recital 26 a (new)
Recital 26 a (new)
(26a) Should voluntary or mandatory relocation of clearing houses take place in future as a result of this revision, further steps must be taken to ensure that competition is guaranteed in the clearing system so that a new EU-based concentration of CCPs does not result from this change.
Amendment 183 #
Proposal for a regulation
Recital 28
Recital 28
(28) Once the Commission has determined the legal and supervisory framework of a third country as equivalent to the Union framework, the process to recognise CCPs from that third country should take into account the risks those CCPs present for the financial stability of the Union or for the Member State. If the risk posed to the EU financial system is high, based on a defined and transparent criteria, then recognition should be denied.
Amendment 219 #
Proposal for a regulation
Recital 39
Recital 39
(39) ESMA should be able to impose fines on both Tier 1 and Tier 2 CCPs where it finds that they have committed, intentionally or negligently, an infringement of this Regulation by providing incorrect or misleading information to ESMA. In addition, ESMA should be able to impose fines on Tier 2 CCPs where it finds that they have committed, intentionally or negligently, an infringement of the additional requirements applicable to them in this Regulation, and to withdraw recognition from Tier 2 CCPs in the case of more than one infringement.