FIA and ISDA submit joint response to ESMA's consultation on CCP conflicts of interest

31 August 2017

On 24 August, FIA and ISDA submitted a joint response to ESMA's consultation paper “ESMA’s Guidelines on CCP conflicts of interest management." This response states that FIA, ISDA and their members welcome ESMA’s work on aligning practices in Europe around best practice in conflict of interest management and support robust rules for managing conflicts of interest in the context of CCPs. We note that these guidelines see conflicts as the result of the breach of rules by stakeholders that need to be controlled and sanctioned. In the environment of CCPs, such dynamic conflicts may arise for instance in the process of default management (DMP) when CCP personnel or seconded clearing member staff have to balance the allocation of a defaulting clearing member’s initial margin against the position of the remaining, non‐defaulting, clearing members.

Protecting confidential information is paramount. Clearing participants often experience however that confidentiality considerations are used as a reason for CCPs to restrict transparency. As a general principle, clearing participants’ information about size, composition, risk of their portfolio and trading activities needs to be protected at all time.

However, as long as the above information is properly protected, outside the default management process confidentiality should not be used as a reason to restrict disclosure of relevant information to market participants, as long as the information is aggregated to an extent such that no individual portfolios, transactions or risk profiles can be deduced or identified.

The full response can be found in Resources on the right.

  • FIA
  • Clearing
  • EMIR