MiFID II insulated from ESA’s recent Leniency

Rachel Wolcott’s March 3 Article in Thomson Reuters ACCELUS highlights the fact that firms who see the EU’s apparent leniency with smaller counterparties in complying with the March 1 Variation Margin deadline as an indication of future leniency should think twice. Retuers Logo

As background, The European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority)  recently published a statement on “Variation margin exchange under the EMIR RTS on OTC derivatives“, in which they state that, with regards to smaller counterparties,  Competent Authorities (CAs) “can take into account the size of the exposure to the counterparty plus its default risk, and that participants must document the steps taken toward full compliance and put in place alternative arrangements to ensure that the risk of noncompliance is contained”.

In the article, Alan McIntyre of RegTek Solutions points out that both the Technical Specification, Guidance, and Validation Guidelines have been available for a while to firms of all sizes, so not to expect leniency when it comes to compliance.

On the other hand, Andy Green of RegTek Solutions points out that although the FCA sees MiFID II as an extension of existing MiFID reporting,  he quotes Stephen Hanks of the FCA saying at a recent conference that “reasonable best efforts” should be made to be compliant, which seems to contradict the tone of the article.

Read the full article here

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