MEP Werner Langen suggested that in contrast to the proposal of the Commission the scope of this Regulation should be limited only to OTC Derivatives (derivatives, which are traded off-market - over the counter). Apart from that they should be exemptions from the clearing rules. Small and medium-sized banks and savings banks with a balance sheet volume of less than 10 billion Euro or medium-scale and medium-to-large enterprises with generating less than billion annual turnover could be exempt from the clearing obligation. This proposal was not yet in the report, but should be introduced, demanded Langen.
There should be exemptions for Undertakings for Collective Investment in Transferable Securities (UCITS), which only carry out derivative transactions on a small scale and therefore are not a financial counterparty. Non-financial counterparties should only be subject to the clearing obligation when they exceeded the clearing threshold by 90 days. According to Langen, the request to exempt pensions or energy funds would currently not find a majority. Another Amendment deletes the establishments of colleges, which are composed from national regulation authorities and the European Securities and Markets Authority (ESMA), from the Report. Only ESMA should be in charge of supervision, as the colleges would be too complicated.

The Social Democrat MEP Leonardo Domenici criticised that the proposed exemptions and thresholds would weaken the text. Watering down the exemptions was his main concern and therefore the most controversial issue in respect of the Amendments. The period of 90 days would also be too long.

Bilateral trade and exemptions for non-financial corporations would continue to provide loopholes, which would undermine the actual target, i.e. to increase the stability of the financial market. That is why the AK requests to cancel these regulations. Another problem is that also clearinghouses can become too big - too big to fail. Hence, they should remain limited to their core business and be subject to parliamentary control.
The draft proposal does not address the reduction of the volume of the derivative markets. However, this would be a central step to reduce the impact of derivative markets on other markets such as the food market and to make control and regulation easier. The reduction of the volume could for example be achieved by a tax on financial transactions.


Further Information:


AK Position on the Proposal for a Regulation on OTC derivatives, central counterparties and trade repositories

Draft report on the proposal for a regulation on OTC derivatives, central counterparties and trade repositories