We understand that regulators have been discussing, and the EBA is currently consulting on, the removal of the CVA exemption provided to banks when trading with pension funds during the period of the EMIR temporary pension exemption. We feel that any removal of this CVA exemption would undermine the temporary exemption provided to pension funds under EMIR and would make the non-cleared OTC derivatives markets unworkable for pension funds by disproportionately increasing the cost of these derivatives. We are concerned that European regulators tasked with implementing the regulation are considering overriding key terms agreed as part of European level 1 policy-making.
We request that the CVA exemption at least remain during the period of the EMIR temporary exemption provided to pension funds.
Please find attached a joint industry letter reflecting the views of pension fund stakeholders on this topic and submitted to the European Commission as part of the call for evidence.