European Commission clarifies the new requirements under MiFID II
On Sept. 22, the European Commission published two separate Delegated Regulations on indirect clearing arrangements. An indirect clearing arrangement refers to a set of relationships where at least two intermediaries are interposed between an end-client and the relevant central counterparty. The aim of the texts is to:
- Simplify and clarify the requirements that relate the management of the default of a client providing indirect clearing services;
- Adapt account structures in order to rationalize the offering of indirect clearing services;
- Allow indirect clearing services to be provided in chains going beyond the client of a direct client provided that appropriate and equivalent protection is ensured throughout the chain; and
- Set out homogeneous requirements for indirect clearing arrangements relating to both over-the-counter and exchange-traded derivatives.
To help member firms in the U.S. comply with the new indirect clearing rules, FIA has published a memo reviewing the compliance obligations created by these rules and the conflicts with certain aspects of U.S. rules and regulations. The memo, which was prepared by the law firm of Katten Muchin Rosenman, identifies circumstances in which the requirements of the U.S. Bankruptcy Code, the Commodity Exchange Act and/or the regulations of the Commodity Futures Trading Commission may prohibit futures commission merchants from complying with such obligations.
