EMIR Refit: Final report on FRANDT clearing published
05 June 2020 Paris
Image: mpaniti/Shutterstock.com
The European Securities and Markets Authority (ESMA) has published its final report on the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms for the provision of clearing services under EMIR Refit
The FRANDT requirements come into force on 18 June 2021 as part of the next phase of the European Market Infrastructure Regulation (EMIR) Refit, which updates and streamlines the original 2012 rules for reporting over-the-counter derivatives.
ESMA’s technical advice details on how to specify the conditions under which the commercial terms for the provision of clearing services are to be considered in-line with FRANDT.
The Authority says its technical advice takes into account the feedback received from industry stakeholders and aims to strike a balance between improving clearing client’s access to clearing services and ensuring such services are provided on FRANDT-compliant terms.
It aims to do this while ensuring the requirements are proportionate and within the mandate received.
ESMA also explains that the requirements have been carefully designed to address clearing clients and clearing service providers’ concerns and aims to facilitate comparability of the information disclosed and address the process of onboarding clearing clients.
Additionally, the requirements strive to standardise the information disclosed to clients bilaterally and encourage further standardisation of contractual terms.
In June 2019, the European Commission tasked ESMA with producing technical advice on the FRANDT terms as input for the development of the delegated act by June 2020.
The final report on the technical advice has now been sent to the European Commission. To read the full report, please
click here.
The FRANDT requirements come into force on 18 June 2021 as part of the next phase of the European Market Infrastructure Regulation (EMIR) Refit, which updates and streamlines the original 2012 rules for reporting over-the-counter derivatives.
ESMA’s technical advice details on how to specify the conditions under which the commercial terms for the provision of clearing services are to be considered in-line with FRANDT.
The Authority says its technical advice takes into account the feedback received from industry stakeholders and aims to strike a balance between improving clearing client’s access to clearing services and ensuring such services are provided on FRANDT-compliant terms.
It aims to do this while ensuring the requirements are proportionate and within the mandate received.
ESMA also explains that the requirements have been carefully designed to address clearing clients and clearing service providers’ concerns and aims to facilitate comparability of the information disclosed and address the process of onboarding clearing clients.
Additionally, the requirements strive to standardise the information disclosed to clients bilaterally and encourage further standardisation of contractual terms.
In June 2019, the European Commission tasked ESMA with producing technical advice on the FRANDT terms as input for the development of the delegated act by June 2020.
The final report on the technical advice has now been sent to the European Commission. To read the full report, please
click here.
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