FIA EPTA letter to the EC on treatment of exchange-traded derivatives in the draft RTS methodology

Taxonomy alignment ratio may cause unintended consequences for the green transition

28 January 2022

FIA EPTA and FIA are concerned by current proposals under the Taxonomy and Sustainable Finance Disclosure Regulation (SFDR) that would in effect restrain the use of listed derivatives by market participants and restrict the amount of capital that can be made available for a sustainable transition.

Listed derivatives are a key component of mature secondary markets. The recent growth in demand for listed ESG derivatives demonstrates that these products are a core component of sustainable investment strategies, especially since the availability of liquid and transparent derivatives significantly reduces funding and financing costs for equity and bond issuers in primary markets. In addition, derivatives products enable asset holders to manage their financial risks, which is crucial for discharging their fiduciary duty and for appropriately managing their long-term investments. This makes listed and cleared derivatives an important component of long-termism in financial markets.

  • Sustainable Finance
  • Europe