Shearman & Sterling LLP | FinReg | European Securities and Markets Authority Publishes Final Technical Advice on FRANDT Clearing Services Provision Under EMIR REFIT
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  • European Securities and Markets Authority Publishes Final Technical Advice on FRANDT Clearing Services Provision Under EMIR REFIT
    06/02/2020
    The European Securities and Markets Authority has published its final report and technical advice on the conditions for clearing services providers’ commercial terms to be considered fair, reasonable, non-discriminatory and transparent, in accordance with changes introduced under the revised European Market Infrastructure Regulation, or EMIR Refit. EMIR Refit requires the European Commission to adopt legislation setting out these conditions by June 18, 2021. The Commission tasked ESMA with publishing technical advice on the conditions, which ESMA launched a consultation on in October 2019. ESMA’s final technical advice takes account of the responses received to the consultation. In particular, the technical advice aims to:
     
    • facilitate the comparability of the information disclosed;
    • address the process of onboarding clearing clients;
    • standardize the information disclosed to clients bilaterally; and
    • encourage further standardization of contractual terms.

    Key aspects of ESMA’s proposed conditions for providing FRANDT commercial terms include:
     
    • public disclosure of commercial terms, including of the clearing service provider’s onboarding framework;
    • development of clear conditions for an appropriate onboarding process and associated documentation;
    • appropriate disclosure of fees for the provision of clearing services, including the identification of onboarding, fixed and transaction fees;
    • disclosure of information about the clearing service provider’s risk assessments, including the risk control criteria applied and any material changes to those criteria;
    • provision in the clearing service provider’s proposal of a list of relevant contracts for the clearing services, together with the proposed standard and client-specific contractual terms;
    • a prescribed RFP process for clearing service providers; and
    • agreement on and compliance with the clearing service provider’s criteria for accepting transactions for clearing from a client.

    View ESMA's final report on FRANDT commercial terms for clearing services.
     
    View details of ESMA's consultation on FRANDT commercial terms for clearing services.
     
    View details of EMIR Refit.
     
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