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ERC contributions to public consultations

ICMA European Repo Committee

The ICMA European Repo Council elects every year a sort of "steering committee", the ICMA European Repo Committee, a group of 19 practitioners who meet regularly to discuss market developments. The ICMA European Repo Committee is composed of practitioners in the field of repo, securities lending, and collateralisation. One of the reasons for the establishment of the ERC has been that the leading practitioners did not feel that their practical day-to-day issues were fully understood and dealt with adequately through existing organisational structures. The ERC Committee is in charge of responding to public consultations. On this page, you will find the latest ERC contributions.

 


 

ESMA Discussion Paper on Draft Technical Standards for the Regulation on improving securities settlement in the European Union and on central securities depositories (CSD)

This discussion paper seeks stakeholders’ views on the possible contents of most of the regulatory and implementing technical standards ESMA is required to draft under the CSDR. The input from stakeholders will help ESMA in the development of the relevant technical standards to be drafted and submitted to the EC for endorsement in the form of Commission Regulations, i.e. a legally binding instrument directly applicable in all Member States of the EU.

The ERC response can be found here.


ESMA Consultation – on major shareholding notifications and indicative list of financial instruments

On 21 March 2014 the European Securities and Markets Authority (ESMA) published its “Consultation Paper on Draft Regulatory Technical Standards on major shareholdings and indicative list of financial instruments subject to notification requirements under the revised Transparency Directive”.  While the main focus of the consultation is on the proposed draft Regulatory Technical Standards (RTSs)on major shareholding notifications, ESMA also sought input on the proposed content of an indicative list of financial instruments referenced to shares and with economic effect similar to holding shares and entitlements to acquire shares.  ESMA is required to submit the draft RTSs to the European Commission by 27 November 2014.

The ERC response concerning repo oriented aspects of this ESMA consultation paper can be found here.

 

BCBS Consultative Document - on the Net Stable Funding Ratio

ICMA is a co-signatory to a joint-associations' response to the BCBS's Consultative Document on the Net Stable Funding Ratio.

The ERC's response can be accessed here.


FSB Consultative Document - on Haircuts

On 29 August 2013 the Financial Stability Board (FSB) published its consultative proposals on haircuts, alongside its “Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos”. The FSB will publish its final recommendations on haircuts in 2014.

The ERC’s response to these proposals on haircuts, prepared jointly with ISLA, can be found here.


FSB – shadow banking WS5 re securities lending & repos


The ISLA and the ERC have sent a joint letter to the FSB to offer their assistance regarding Workstream 5’s on-going work.  A copy of this letter can be found here.


BCBS - on Revised Basel III Leverage Ratio

On 26 June 2013, the BCBS published for public comment a consultative document on “Revised Basel III leverage ratio framework and disclosure requirements”.  This consultative document seeks comments on a specific formulation for calculating the leverage ratio by banks subject to the Basel III framework, as well as a set of public disclosure requirements.

The ERC response concerning repo related aspects of this BCBS consultation can be found here.


CPSS/IOSCO - on Authorities’ access to trade repository data

On 11 April 2013, the CPSS and IOSCO published for public comment a joint consultative report on “Authorities' access to trade repository data”.  The purpose of this joint consultative report is to provide guidance to TRs and authorities on the principles that should guide authorities' access to data held in TRs for typical and non-typical data requests.

The ERC response concerning one specific aspect of this CPSS/IOSCO consultation can be found here.


FSB Consultative Documents - on Shadow Banking

On 18 November 2012 the Financial Stability Board (FSB) published its three consultative documents regarding “Strengthening Oversight and Regulation of Shadow Banking”. The FSB will continue to review the progress of its shadow banking workstreams and expects to publish final recommendations in September 2013.

The ERC response concerning repo oriented aspects of these three FSB consultative documents can be found here.


BCBS/IOSCO - on margin requirements for non-centrally-cleared derivatives


On 6 July 2012 the BCBS and IOSCO published for public comment a joint consultative paper on “Margin requirements for non-centrally-cleared derivatives”. This joint consultative paper seeks stakeholders’ views on the formulation of consistent regulatory margin requirements across jurisdictions.

The ERC response concerning certain repo oriented aspects of this BCBS/IOSCO consultation can be found here.


HMT - on Broadening the UK Resolution Regime

On 1 August 2012 HM Treasury published for public comment a consultation paper on broadening the UK resolution regime to cover non-bank financial institutions.  This consultation paper considers the best ways to deal with the risks associated with failures of investment firms, central counterparties, other financial market infrastructure firms and insurance companies.

The ERC response concerning repo specific aspects of this HMT consultation can be found here.

 
CPSS/IOSCO - on Recovery & Resolution of FMIs

On 31 July 2012, the CPSS and IOSCO published for public comment a joint consultative report on the “Recovery and resolution of financial market infrastructures” (“FMIs”).  This joint consultative paper considers a wide range of potential measures intended to ensure that authorities across the globe have the powers and tools necessary to achieve effective resolution of systemically important FMIs.

The ERC response concerning certain repo oriented aspects of this CPSS/IOSCO consultation can be found here.


European Commission Green Paper - on Shadow Banking


On 19 March 2012 the European Commission published its “Green Paper on Shadow Banking”.  On the basis of the outcome of this consultation and the work carried out by the ESRB and the ESAs, the Commission will decide on the appropriate follow-up regarding the shadow banking issues outlined in this Green Paper, including legislative measures, as appropriate.

The ERC response primarily concerning repo oriented aspects of this European Commission Green Paper can be found here.


FSB Interim Report  - on securities lending and repos


On 27 April 2012 the Financial Stability Board (FSB) published its Shadow Banking Workstream’s “Interim Report on Securities Lending and Repos”.  The financial stability issues identified therein will form the basis for the next stage of the Workstream’s work, which is to develop appropriate policy measures to address risks, where necessary, by the end of 2012.

The ERC response concerning repo oriented aspects of this FSB Interim Report can be found here.


ECB/TFAX Mini-consultation - on adaptation to cross-CSD settlement in T2S

On 1 March 2012 the European Central Bank’s (ECB’s) TFAX published its mini-consultation paper – on adaptation to cross-CSD settlement in T2S.  Given the desirability of harmonised adaptation to T2S, this focuses on solution papers for priority topics.  Amongst these is the topic of CSD ancilliary services, which concerns the processes involved in repo; triparty repo; and securities lending and borrowing.

The ERC response concerning repo oriented aspects of this ECB/TFAX mini-consultation paper can be found here.


ESA Consultation - on draft technical standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories
 
On 6 March 2012 the European Supervisory Authorities (ESA) published their joint discussion paper – Draft Regulatory Technical Standards on risk mitigation techniques for OTC derivatives not cleared by a CCP under EMIR.  The Regulation acknowledges that not all OTC derivatives would meet the necessary requirements to be centrally cleared and, for this reason, it introduces provisions on risk mitigation techniques for OTC derivatives not cleared by a CCP.

The ERC response concerning repo oriented aspects of this ESA joint consultation paper can be found here

 

ESMA Consultation - on draft technical standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories
 
On 16 February 2012 the European Securities and Markets Authority (ESMA) published its discussion paper – “Draft Technical Standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories”.  The Regulation delegates or confers powers to the Commission to adopt regulatory technical standards (RTS) and implementing technical standards (ITS) on a number of areas; and this discussion paper covers the draft RTS and ITS which ESMA is required to develop.

The ERC response concerning repo oriented aspects of this ESMA consultation paper can be found here.

 

FSB Consultation - on effective resolution of Systemically Important Financial Institutions

On 19 July 2011 the Financial Stability Board published its consultation paper – “Effective Resolution of Systemically Important Financial Institutions”. The purpose of this consultation is to develop recommendations for submission to the G20 Leaders Summit in Cannes on 3-4 November 2011.

The ERC response concerning repo oriented aspects of this FSB consultation paper can be found here.

 

CPSS / IOSCO Joint Consultation - Principles for financial market infrastructures

On 10 March 2011 the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) published their joint consultation paper- "Principles for financial market infrastructures". When finalised, these new principles will replace three existing sets of CPSS and CPSS-IOSCO standards.

The ERC response concerning this CPSS / IOSCO joint consultation paper can be found here.

 

European Commission Consultation - on financial sector taxation

On 22 February 2011 the European Commission published its paper – “Consultation on financial sector taxation”. The purpose of this consultation is to gather input from all stakeholders in order to inform decisions on the applicable policy options.

The ERC response concerning repo oriented aspects of this European Commission consultation paper can be found here.

 

European Commission Consultation - on CSDs and the harmonisation of certain aspects of securities settlement

On 13 January 2011 the European Commission published its consultation paper – “Common rules for CSDs and securities settlement”. The purpose of this consultation is to gather input from all stakeholders in order to inform legislative proposals due in June 2011.

The ERC response concerning repo oriented aspects of this European Commission consultation paper can be found here.

 

European Commission Consultation - on technical details of a possible European crisis management framework

On 6 January 2011 the European Commission published its consultation paper – “Technical details of a possible European crisis management framework”. The purpose of this consultation is to seek views in order to inform legislative proposals intended to be released summer 2011.

The ERC response concerning repo oriented aspects of this European Commission consultation paper can be found here.

 

European Commission Consultation - Harmonisation of securities law

On 5 November 2010 the European Commission published its consultation paper- “Legislation on legal certainty of securities holding and dispositions”. This consultation document outlines certain principles that the Commission determined it should submit to stakeholders for further evaluation before progressing with work on a formal legislative proposal.

The ERC response concerning repo oriented aspects of this European Commission consultation paper can be found, as Annex 2 of ICMA’s consolidated response, here.

 

European Commission Consultation - Derivatives and Market Infrastructures

On 14 June 2010 the European Commission published its consultation paper – “Derivatives and Market Infrastructures”. This consultation document outlines the Internal Market DG's current thinking on how to implement four of the policy actions that were announced in the Commission’s Communication of October 2009.

The ERC response concerning repo oriented aspects of this European Commission joint consultation paper can be found here.

 

European Commission Consultation - Short Selling

In June, the European Commission published a consultation paper to which ICMA submitted two responses:

(1) ERC response
(2) Secondary Markets response

The European Commission subsequently published a draft Short Selling Regulation and Regulatory Impact Assessment in September. This draft is currently being considered by the European Parliament and Council.

In this context, the ICMA European Repo Council wrote to Mr. Pascal Canfin, MEP on 13 January to outline the concerns with the way Article 13 of the proposed Regulation was drafted. Article 13 of the proposed Regulation requires provisions be put in place for the automatic buy-in of securities and imposition of daily payments in the case of failure to deliver securities within the prescribed time period.

 

CPSS / IOSCO Joint Consultation - Guidance on the application of 2004 CPSS-IOSCO Recommendations for Central Counterparties to OTC Derivatives CCPs

On 12 May 2010 the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) published their joint consultation paper – “Guidance on the application of 2004 CPSS-IOSCO Recommendations for Central Counterparties to OTC derivatives CCPs”. This effort provides an input to the comprehensive review of Recommendations for Central Counterparties and other international standards for financial market infrastructures announced in February.

The ERC response concerning repo oriented aspects of this CPSS / IOSCO joint consultation paper can be found here.

 

Basel and European Commission Consultations - Strengthening Capital & Liquidity Regimes

On 17 December 2009 the Basel Committee published its consultative proposals to strengthen the resilience of the banking sector. These proposals aim to strengthen global capital and liquidity regulations with the goal of promoting a more resilient banking sector. The fully calibrated set of standards will be developed by the end of 2010 to be phased in as financial conditions improve and the economic recovery is assured, with the aim of implementation by end-2012.

The ERC response concerning repo oriented aspects of these Basel consultation papers can be found here.

On 26 February 2009 the European Commission asked stakeholders for views on further possible changes to Capital Requirements Directive ('CRD IV'). The possible changes set out in the consultation document are closely aligned with the forthcoming amendments to the Basel II framework and the introduction of a global liquidity standard that are currently being drawn up by the Basel Committee. The results will feed into a legislative proposal scheduled for the second half of 2010.

The ERC response concerning repo oriented aspects of this European Commission consultation can be found here.

 

FSA Consultation - Strengthening Capital Standards

On 10 December 2009 the UK Financial Services Authority (FSA) published a consultation paper ‘CP09/29: Strengthening Capital Standards 3’. These proposals aim at ensuring the financial soundness of firms by strengthening the prudential regime. The FSA plans to issue feedback to this consultation together with a policy statement confirming the final rules later on in 2010 - the rules must come into effect on 1 January 2011.

The ERC response concerning one specific aspect of this FSA’s consultation paper can be found here.

 

HM Treasury Consultation - Establishing resolution arrangements for investment banks

On 16 December 2009 Her Majesty’s Treasury published a consultation paper ‘Establishing resolution arrangements for investment banks’. This report outlines a package of more than 30 policy initiatives, designed to mitigate the impact of any future investment banking failure. HM Treasury anticipate that a further document with final proposals, and draft secondary legislation as necessary, will be published in 2010.

The ERC response to the repo specific aspects of this HM Treasury consultation paper can be found here.

 

IOSCO consultation report on unregulated financial markets and products

On 5 May 2009 the International Organization of Securities Commissions (IOSCO) Technical Committee published a consultation report ‘Unregulated Financial Markets and Products’, prepared by its task force on this topic. This report contains interim recommendations for regulatory action designed to improve confidence in the securitisation process and the market for credit default swaps (CDS). The IOSCO task force was established November 2008, in response to concerns expressed by the G20 regarding the crisis and the pivotal role that certain unregulated market segments and products had played in the evolution of capital markets.

The ERC response to the IOSCO consultation paper can be found here.

 

Evaluation criteria of specialists in government bonds – Year 2009

The Italian Ministry of Finance and Economy published on 23 December 2008 the evaluation criteria of the Italian Government Bond Specialists’ activity. The document illustrates the criteria used for the evaluation of the Specialists’ activity for the year 2009, on the basis of the legislative framework currently in effect.

In light of the ‘Evaluation of Specialists’ section of the document, the ERC considers that clear discrepancies appear in secondary market trading. The letter sent to the Italian Ministry of Finance and Economy can be found here.

 

CESR/ESCB Recommendations for securities clearing and settlement systems and central counterparties in the European Union

The European System of Central Banks (ESCB) and the Committee of European Securities Regulators (CESR) have published on 28 October 2008, the document entitled “Draft recommendations for securities clearing and settlement systems and draft recommendations for central counterparties in the European Union” for public consultation in the context of the joint work being undertaken by the ESCB and the CESR in the field of securities clearing and settlement. Part 1 of the consultation paper contains 19 recommendations, which deal with central securities depositaries (CSDs), and Part 2 contains 15 recommendations regarding central counterparties (CCPs), which aim to increase the safety, soundness and efficiency of securities clearing and settlement systems and CCPs, respectively. The annexes include an assessment methodology and a glossary of terms.

The recommendations are based on the recommendations for securities settlement systems of November 2001 and the recommendations for CCPs of November 2004 issued by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions (CPSS-IOSCO).

The ERC response to the CESR/ESCB consultation paper can be found here.

 

BBA consultation paper on ‘understanding the construction and operation of BBA LIBOR – strengthening for the future’

The paper ‘Understanding the Construction and Operation of BBA LIBOR – Strengthening for the Future’ explains in some detail how LIBOR is set and emphasises that it is a benchmark for cash and is not a derivative or FX benchmark. It also gives some insight into the panel selection process, explaining that any bank with significant business in the relevant currency in the UK market can apply to join the panels. ‘Strengthening LIBOR’ for the future includes taking a number of steps.

The ERC response to the BBA consultation paper can be found here.

 

T2S User Requirements Document

The European Central Bank launched its second consultation as regards Target-2-Securities on 18 December 2007. The User Requirements document, prepared by the ECB, defines the features that both CSDs and financial market participants would need for cross-border settlement in Europe.

The ERC response to the T2S URD can be found here.

 

CCBM2 User Requirements Document

The European Central Bank launched its second consultation as regards CCBM2 on 26 February 2008. The User Requirements documents, prepared by the ECB, reflects the six guiding principles of CCBM2.

The ERC response to CCBM2 URD can be found here.



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