Vice-President Valdis Dombrovskis opening remarks
At the European Parliament Plenary debate
On revision on European Market Infrastructure Regulation (‘EMIR REFIT’)
Strasbourg, 11 June 2018
Honourable Mr. Chair,
First of all ,I would like to thank the Rapporteur and the shadow rapporteurs for their excellent work in preparing the Committee's report.
Your vote tomorrow concerns the first of the two proposals we put forward on the European Market Infrastructure Regulation (‘EMIR’) in 2017. This proposal is about simplifying EMIR, reducing costs and burdens where possible, without putting into question the core objectives of EMIR: financial stability, risk mitigation and transparency. The proposal is part of the Commission’s Regulatory Fitness and Performance programme (REFIT). It emphasises the need for cost reduction and simplification.
The need to revise some of EMIR's requirements became evident from the responses we got to the Commission’s general Call for Evidence on financial services legislation in 2016.
Our proposal is technical, but important. Its saving potential is big. The estimated cost reductions are up to 6.9 billion Euro in fixed or one-off costs, and up to 2.6 billion Euro in annual operational costs.
Our proposal includes a more proportionate clearing obligation for non-financial firms. It exempts the smallest financial counterparties from the clearing obligation altogether. It introduces a new mechanism to suspend clearing in exceptional circumstances. It incentivises clearing and improves access to it. It simplifies reporting requirements in particular for businesses, without compromising the quality of data.
Companies, market participants, regulators and supervisors all agree on the need for this proposal, and largely support it.
I am very pleased that the debate and the vote take place now, as the adoption of the proposal is urgent. As Mr. Lange already outlined, pension funds currently benefit from an exemption from central clearing which expires very soon. Without legislative change, this exemption cannot continue.
But we still need this exemption for a short time. While the market has progressed, it has not yet adopted viable solutions for pension funds to centrally clear their derivatives.
Over the past months, the Commission brought together all stakeholders to discuss progress towards a clearing solution for pension funds. Last week I hosted a High-Level meeting with those stakeholders, and I was happy that some of you joined us for this. I was glad to see that industry stakeholders all committed to design and implement a solution. We need a bit of time to put this commitment in practice. But let me be clear – we will not give a carte blanche: Progress during this extended exemption period must be monitored, and the Commission will set up a monitoring group for that purpose.
Finally, let me highlight again that the purpose of this proposal is to introduce some targeted amendments to simplify and to make the EMIR requirements more proportionate. But these amendments need to uphold the fundamental objectives of EMIR. For instance, when it comes to reducing requirements to report or exchange bilateral margins for derivatives. If we go too far, supervisors will no longe be able to supervise and monitore over-the-counter ('OTC') derivatives and mitigate systemic risk. We must keep in mind that this piece of legislation is one of the cornerstones of the new system we put in place after the crisis, in agreement with the G20. It is our collective responsibility to ensure that it remains effective.