ESMA’s Executive Director discusses its priorities for derivatives

Natasha Cazenave, ESMA's Executive Director delivered a speech on 27 September 2021 discussing ESMA's priorities around derivatives.

The speech focused on the following two elements and ESMA's current work in these areas.

ESMA's recommendations for the review of the MiFID II /MiFIR framework

Whilst the current discussion largely focusses on the establishment of a consolidate tape, Ms Cazenave sees merit in a broader review of the legislative framework and refers to the need for “less complexity, more effectiveness".

ESMA aims to finalise and submit to the Commission the technical standards regarding the MiFID II capital markets recovery package in November 2021.

ESMA intends to commence a peer review on the Guidelines on the provision of market data in early 2023.

ESMA's work on accompanying the transition to risk free rates in the context of the EMIR clearing obligation and the MiFIR derivatives trading obligation

ESMA is working on its final report which it intends to submit this autumn. It will take another look at the development of the trading and clearing activity over the last months. Ms Cazenave suggests that this is one of the areas where there may be some temporary inconsistencies in the scope of the clearing and trading obligations. The process for delivering technical standards, which is not very flexible and relatively long, makes it challenging to perfectly synchronise the transition to the new benchmarks in the EU with the clearing and trading obligations in other jurisdictions.

Firms are reminded of the European Commission's communications on the need for EU counterparties to reduce reliance on UK CCPs.