ESMA releases responses from CCP鈥檚 conflict of interest report
15 September 2017 Paris
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There are 鈥渟ituations where central counterparty (CCP) conflicts of interest cannot reasonably or proportionately be avoided鈥�, according to the London Stock Exchange.
This statement was a response to an industry consultation by the European Securities and Markets Authority (ESMA), which looked into the issue of conflicts of interests between a CCP and its clearing members under the European Market Infrastructure Regulation (EMIR).
It also tried to verify potential areas where CCPs are not sufficiently bolstered to withstand risks of damage to the interests of a clearing member or client.
As part of the consultation, ESMA proposed giving further counsel to CCP鈥檚 management to 鈥渆nsure common, uniform and consistent application鈥� of the EMIR guidelines, which were first introduced in December 2012 under EU legislation.
In response, the London Stock Exchange said: 鈥淭he adoption of rules related to the limitation of the number of contracts or mandates board members and executive directors may have is not mandatory to appropriately mitigate the risk of conflict of interests.鈥�
鈥淚ndependence is a quality that can be possessed by individuals, and is an essential component of professionalism and professional behaviour.鈥�
Deutsche Boerse subsidiary Eurex Clearing, concluded that the 鈥減roposed rules of conduct [are] appropriate.鈥�
However it added: 鈥淚n order to prevent misinterpretations of the term 鈥榚xternal audits having a link with or receiving benefit from the CCP鈥�, we propose adding a reference to the existing rules or deleting this specific requirement.鈥�
BME Clearing went as far as to propose a complete deletion of this measure, saying: 鈥淭he limitation of the number of contracts or mandates of board members and executive directors is not reasonable.鈥�
鈥淓xternal auditor appointment is already regulated in the directive on statutory audits of annual accounts and consolidated accounts.鈥�
Other clearinghouses and stakeholders that responded to the consultation included Amundi, European Commodity Clearing, the European Association of CCP Clearing Houses and the International Swaps and Derivative Association.
Subscribe for free to the next issue of Securities Lending Times, published on 19 September, to read analysis of all the responses in full.
This statement was a response to an industry consultation by the European Securities and Markets Authority (ESMA), which looked into the issue of conflicts of interests between a CCP and its clearing members under the European Market Infrastructure Regulation (EMIR).
It also tried to verify potential areas where CCPs are not sufficiently bolstered to withstand risks of damage to the interests of a clearing member or client.
As part of the consultation, ESMA proposed giving further counsel to CCP鈥檚 management to 鈥渆nsure common, uniform and consistent application鈥� of the EMIR guidelines, which were first introduced in December 2012 under EU legislation.
In response, the London Stock Exchange said: 鈥淭he adoption of rules related to the limitation of the number of contracts or mandates board members and executive directors may have is not mandatory to appropriately mitigate the risk of conflict of interests.鈥�
鈥淚ndependence is a quality that can be possessed by individuals, and is an essential component of professionalism and professional behaviour.鈥�
Deutsche Boerse subsidiary Eurex Clearing, concluded that the 鈥減roposed rules of conduct [are] appropriate.鈥�
However it added: 鈥淚n order to prevent misinterpretations of the term 鈥榚xternal audits having a link with or receiving benefit from the CCP鈥�, we propose adding a reference to the existing rules or deleting this specific requirement.鈥�
BME Clearing went as far as to propose a complete deletion of this measure, saying: 鈥淭he limitation of the number of contracts or mandates of board members and executive directors is not reasonable.鈥�
鈥淓xternal auditor appointment is already regulated in the directive on statutory audits of annual accounts and consolidated accounts.鈥�
Other clearinghouses and stakeholders that responded to the consultation included Amundi, European Commodity Clearing, the European Association of CCP Clearing Houses and the International Swaps and Derivative Association.
Subscribe for free to the next issue of Securities Lending Times, published on 19 September, to read analysis of all the responses in full.
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