On 22 July 2019, the European Securities and Markets Authority (ESMA) published its annual peer review report on the overall supervision of EU central counterparties (CCPs) by Member State national competent authorities (NCAs).
The peer review covered NCAs of CCPs authorised under the European Markets Infrastructure Regulation (EMIR) as of 1 June 2018. On this date, 16 CCPs were authorised under EMIR in the EU. The peer review covered the NCAs of the 12 Member States where the above mentioned 16 CCPs are established, namely: DE, EL, ES, FR, IT, HU, NL, AT, PL, PT, SE and UK.
Overall, the review found that NCAs’ supervisory activities on CCPs’ collateral and funding arrangements, is satisfactory. However, the review found that the use by NCAs of quantitative metrics to assess the liquidity and low market risk of collateral was quite limited. While, regarding funding arrangements, the degree of convergence on the basic conditions that identify committed credit and repo lines is in general high, different supervisory practices apply for pre-arranged funding arrangements involving repos and liquidity generation from outright sales of securities.
The report also identifies several best practices and considerations to further enhance supervisory convergence with respect to CCPs’ collateral and liquidity arrangements.
The report is for information purposes only. ESMA will follow up on the findings listed in the report in order to identify the most appropriate tools to further enhance supervisory convergence with respect to the considerations included in the report.