Response to joint Consultation on draft RTS on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP

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Question 2. Are there particular aspects, for instance of an operational nature, that are not addressed in an appropriate manner? If yes, please provide the rationale for the concerns and potential solutions.

Our response letter sets out particular difficulties for non-EU vehicles, such as repackaging issuers - see paragraphs 2 and 3. We also highlight difficulties with concentration limites for certain equity finance transactions - see paragraphs 4 and 5 of the attached response.

Question 4. In respect of the use of a counterparty IRB model, are the counterparties confident that they will be able to access sufficient information to ensure appropriate transparency and to allow them to demonstrate an adequate understanding to their supervisory authority?

We do not address the proposed standards on models - our attached response concentrates on legal issues.

Question 6. How will market participants be able to ensure the fulfilment of all the conditions for the reuse of initial margins as required in the BCBS-IOSCO framework? Can the respondents identify which companies in the EU would require reuse or re-hypothecation of collateral as an essential component of their business models?

Our response concentrates on the legal issues surrounding re-use of margin. We highlight one particular example (equity finance transactions) but this is not exhaustive. The ability to re-use margin can be essential to structuring many bespoke financing arrangements.

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Ashurst submission to ESAs on RTS re. margin non-cleared derivatives.pdf (545.7 KB)

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Response to joint Consultation on draft RTS on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP

Question 2. Are there particular aspects, for instance of an operational nature, that are not addressed in an appropriate manner? If yes, please provide the rationale for the concerns and potential solutions.

Question 4. In respect of the use of a counterparty IRB model, are the counterparties confident that they will be able to access sufficient information to ensure appropriate transparency and to allow them to demonstrate an adequate understanding to their supervisory authority?

Upload files

Name of organisation