Jun192017

ESMA consults on draft standards for trading obligation for derivatives under MiFIR

EU
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MiFIR’s trading obligation will move over-the-counter (OTC) trading in liquid derivatives onto organised venues thus increasing market transparency and integrity alike. MiFIR, which implements parts of the MiFID II framework, outlines the process for determining which derivatives should be traded on-venue.

ESMA invites stakeholders to provide feedback on ESMA’s approach, which was revised following an earlier consultation in 2016. Key elements of today’s published consultation include:

  • liquidity analysis for interest rate derivatives and Index CDS based on a dataset covering the second half of 2016, incl. the proposal on which derivatives should be made subject to the trading obligation;
  • the proposal on how to phase-in the trading obligation for derivatives
  • ESMA’s approach concerning the instrument register to be maintained by ESMA for the trading obligation; and
  • a high-level cost-benefit-analysis.

The consultation is open for comments until 31 July 2017. ESMA will use the feedback received to finalise its draft RTS on the trading obligation. The submission of supportive data would be particularly appreciated. ESMA will send the final draft standards to the European Commission for endorsement.

Background

The trading obligation for derivatives under MiFIR is closely linked to the clearing obligation under the European Market Infrastructure Regulation (EMIR). Once a class of derivatives needs to be centrally cleared under EMIR, ESMA must determine whether these derivatives (or a subset of them) should be traded on-venue, meaning on a regulated market (RM), multilateral trading facility (MTF), organised trading facility (OTF) or an equivalent third-country trading venue.

MiFIR foresees two tests to determine the trading obligation: The venue test (a class of derivatives must be admitted to trading or traded on at least one admissible trading venue) and the liquidity test (whether a derivative is ‘sufficiently liquid’ and there is sufficient third-party buying and selling interest).

Jun192017

ESMA consults on draft standards for trading obligation for derivatives under MiFIR

EU
image_pdfimage_print

MiFIR’s trading obligation will move over-the-counter (OTC) trading in liquid derivatives onto organised venues thus increasing market transparency and integrity alike. MiFIR, which implements parts of the MiFID II framework, outlines the process for determining which derivatives should be traded on-venue.

ESMA invites stakeholders to provide feedback on ESMA’s approach, which was revised following an earlier consultation in 2016. Key elements of today’s published consultation include:

  • liquidity analysis for interest rate derivatives and Index CDS based on a dataset covering the second half of 2016, incl. the proposal on which derivatives should be made subject to the trading obligation;
  • the proposal on how to phase-in the trading obligation for derivatives
  • ESMA’s approach concerning the instrument register to be maintained by ESMA for the trading obligation; and
  • a high-level cost-benefit-analysis.

The consultation is open for comments until 31 July 2017. ESMA will use the feedback received to finalise its draft RTS on the trading obligation. The submission of supportive data would be particularly appreciated. ESMA will send the final draft standards to the European Commission for endorsement.

Background

The trading obligation for derivatives under MiFIR is closely linked to the clearing obligation under the European Market Infrastructure Regulation (EMIR). Once a class of derivatives needs to be centrally cleared under EMIR, ESMA must determine whether these derivatives (or a subset of them) should be traded on-venue, meaning on a regulated market (RM), multilateral trading facility (MTF), organised trading facility (OTF) or an equivalent third-country trading venue.

MiFIR foresees two tests to determine the trading obligation: The venue test (a class of derivatives must be admitted to trading or traded on at least one admissible trading venue) and the liquidity test (whether a derivative is ‘sufficiently liquid’ and there is sufficient third-party buying and selling interest).

Jun192017

Consultation on trading obligation for derivatives under MiFIR

EU
image_pdfimage_print

Responding to this paper

ESMA invites comments on all matters in this paper and in particular on the specific questions summarised in Annex 1. Comments are most helpful if they:

  1. respond to the question stated;
  2. indicate the specific question to which the comment relates;
  3. contain a clear rationale; and
  4. describe any alternatives ESMA should consider.

ESMA will consider all comments received by 31 July 2017.

All contributions should be submitted online at www.esma.europa.eu under the heading ‘Your input – Consultations’.

Publication of responses

All contributions received will be published following the close of the consultation, unless you request otherwise. Please clearly and prominently indicate in your submission any part you do not wish to be publically disclosed. A standard confidentiality statement in an email message will not be treated as a request for non-disclosure. A confidential response may be requested from us in accordance with ESMA’s rules on access to documents. We may consult you if we receive such a request. Any decision we make not to disclose the response is reviewable by ESMA’s Board of Appeal and the European Ombudsman.

Data protection

Information on data protection can be found at www.esma.europa.eu under the heading Legal Notice.

Who should read this paper

All interested stakeholders are invited to respond to this consultation paper. In particular, responses are sought from trading venues and from counterparties trading OTC-derivatives that may become subject to the trading obligation.

Jun192017

Consultation on trading obligation for derivatives under MiFIR

EU
image_pdfimage_print

Responding to this paper

ESMA invites comments on all matters in this paper and in particular on the specific questions summarised in Annex 1. Comments are most helpful if they:

  1. respond to the question stated;
  2. indicate the specific question to which the comment relates;
  3. contain a clear rationale; and
  4. describe any alternatives ESMA should consider.

ESMA will consider all comments received by 31 July 2017.

All contributions should be submitted online at www.esma.europa.eu under the heading ‘Your input – Consultations’.

Publication of responses

All contributions received will be published following the close of the consultation, unless you request otherwise. Please clearly and prominently indicate in your submission any part you do not wish to be publically disclosed. A standard confidentiality statement in an email message will not be treated as a request for non-disclosure. A confidential response may be requested from us in accordance with ESMA’s rules on access to documents. We may consult you if we receive such a request. Any decision we make not to disclose the response is reviewable by ESMA’s Board of Appeal and the European Ombudsman.

Data protection

Information on data protection can be found at www.esma.europa.eu under the heading Legal Notice.

Who should read this paper

All interested stakeholders are invited to respond to this consultation paper. In particular, responses are sought from trading venues and from counterparties trading OTC-derivatives that may become subject to the trading obligation.

Jun192017

UN urges ‘reboot’ of drought responses to focus more on preparedness

United Nations
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19 June 2017 – Investing in preparedness and building the resilience of farmers is fundamental to cope with extreme drought, because responding to such situations when they hit might be too late, the head of the United Nations agricultural agency said today.

&#8220People die because they are not prepared to face the impacts of the drought &#8211 because their livelihoods are not resilient enough,&#8221 Food and Agriculture Organization (FAO) Director-General José Graziano da Silva told an international seminar in Rome, Italy, recalling that more than 250,000 people perished from hunger in the 2011 drought in Somalia.

&#8220Saving livelihoods means saving lives &#8211 this is what building resilience is all about,&#8221 he added, noting that for years, the focus has been responding to droughts when they happen, rushing to provide emergency assistance and to keep people alive.

While these emergency responses are important, investing in preparedness and resilience puts countries on a footing to act quickly before it is too late, meaning that farmers and rural communities are better positioned to cope with extreme weather when it does hit.

The need for a global drought re-boot is pressing. The many impacts of drought drive not only hunger and instability but cause economic losses up to $8 billion each annually.

As the planet’s climate changes, severe dry-spells are becoming more and more frequent. Since the 1970s, the land area in the world affected by situations of drought has doubled.

People die because they are not prepared to face the impacts of the droughtFAO Director General

The burden is especially high in developing countries, where agriculture remains an economic mainstay. Over 80 percent of damage and losses caused by drought are born by agriculture in the developing world, FAO studies have shown.

And Africa in particular has borne the brunt. Between 2005 and 2016, 84 droughts affected 34 different African nations.

At today’s event, FAO and the World Meteorological Organization (WMO) signed a memorandum of understanding to deepen their cooperation. They will cooperate in improving agro-meteorological data, tools and methods as well as enhancing access by small farmers to products and services to help them anticipate and proactively prepare for droughts.

&#8220WMO provides guidance and scientific information to strengthen national services responsible for addressing drought risks to agriculture,&#8221 said WMO Secretary General Petteri Taalas. &#8220We encourage countries to take early action against drought and to move towards a more proactive approach.&#8221

International Fund for Agriculture Development (IFAD) President Gilbert F. Houngbo in his remarks emphasized the need break the cycle of crisis, disaster and relief, calling on the international community to be proactive and to think not just of today’s emergencies, but also of how to prevent tomorrow’s.

&#8220This means investing in smallholder farmers to help them address productivity challenges, give them access to markets and finance and most importantly encourage climate-smart agriculture so that when the drought inevitably comes, they have the tools they need to survive and thrive,&#8221 said Mr. Houngbo.