FIA has responded to the European Securities and Markets Authority's consultation on guarantees as central counterparty collateral and on certain aspects of CCP investment policy.
FIA broadly supports the objective of expanding eligible collateral for non-financial counterparties (NFCs) under EMIR 3.0, while ensuring the framework remains legally certain, operationally workable and risk-sound. FIA's response sets out several key positions:
- Substance over form: The regulatory technical standards should capture instruments based on their substantive legal and operational features, including letters of credit (LCs), rather than relying on narrow terminology. ESMA is urged to confirm this interpretation explicitly.
- Clearing member protection: Beneficiary-transfer or dual-beneficiary mechanisms should be mandatory, not optional, to protect clearing members in client default scenarios.
- Account segregation: Guarantees should be permitted in both individually segregated accounts (ISA) and gross omnibus accounts (GOSA), subject to robust identification and attribution safeguards.
- Discretion preserved: The acceptance of guarantees must remain a discretionary, risk-based decision by CCPs and clearing members.
- Prudential alignment: FIA highlights that prudential constraints under the Capital Requirements Regulation may limit the practical uptake of guarantees regardless of RTS design.
Read the response in full here.
