When amending regulation to ensure consistency of treatment between derivatives associated with covered bonds and derivatives associated with securitisations, with regard to the clearing obligation and the margin requirements on non-centrally cleared OTC derivatives we find it im-portant to extend that consistency to also include UCITS compliant cov-ered bonds. If derivatives associated with securitisations are exempted from the clearing obligation, in order to avoid regulatory arbitrage and to secure a level playing field the same should apply for derivative asso-ciated with UCITS compliant covered bonds.
We also recommend the ESAs to observe the EU Commissions proposal for a covered bond directive, as tabled in March 2018. This directive also regulates, inter alia, the conditions for covered bond derivatives in article 11. We strongly advice the ESAs to secure that the Delegated Regulations and the coming Covered Bond directive do properly interact with each other and do not disturb well established covered bond markets. One issue to clarify could be the requirement for pari passu ranking of the derivative counterparty also in insolvency and resolution.