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14.2.2024

PR_COD_1consamCom

PROVISIONAL AGREEMENT RESULTING FROM INTERINSTITUTIONAL NEGOTIATIONS

Symbols for procedures

Subject: Proposal for a directive of the European Parliament and of the Council Amending Directives 2009/65/EU, 2013/36/EU and (EU) 2019/2034 as regards the treatment of concentration risk towards central counterparties and the counterparty risk on centrally cleared derivative transactions

* Consultation procedure

*** Consent procedure

***I Ordinary legislative procedure (first reading)

***II Ordinary legislative procedure (second reading)

***III Ordinary legislative procedure (third reading)

(The type of procedure depends on the legal basis proposed by the draft act.)

Amendments to a draft act

Amendments by Parliament set out in two columns

Deletions are indicated in bold italics in the left-hand column. Replacements are indicated in bold italics in both columns. New text is indicated in bold italics in the right-hand column.

The first and second lines of the header of each amendment identify the relevant part of the draft act under consideration. If an amendment pertains to an existing act that the draft act is seeking to amend, the amendment heading includes a third line identifying the existing act and a fourth line identifying the provision in that act that Parliament wishes to amend.

Amendments by Parliament in the form of a consolidated text

New text is highlighted in bold italics. Deletions are indicated using either the ▌symbol or strikeout. Replacements are indicated by highlighting the new text in bold italics and by deleting or striking out the text that has been replaced.

By way of exception, purely technical changes made by the drafting departments in preparing the final text are not highlighted.

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a directive of the European Parliament and of the Council amending Directives 2009/65/EU, 2013/36/EU and (EU) 2019/2034 as regards the treatment of concentration risk towards central counterparties and the counterparty risk on centrally cleared derivative transactions

(COM(2022)0698 – C90411/2022 – 2022/0404(COD))

The interinstitutional negotiations on the aforementioned proposal for a directive have led to a compromise. In accordance with Rule 74(4) of the Rules of Procedure, the provisional agreement, reproduced below, is submitted as a whole to the Committee on Economic and Monetary Affairs for decision by way of a single vote.

(Ordinary legislative procedure: first reading)

– having regard to the Commission proposal to Parliament and the Council (COM(2022)0698),

– having regard to Article 294(2) and Article 53(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90411/2022),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs (A9-0399/2023),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Amendment 1

AMENDMENTS BY THE EUROPEAN PARLIAMENT*

to the Commission proposal

---------------------------------------------------------

2022/0404 (COD)

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Central Bank (1),Bank,

Acting in accordance with the ordinary legislative procedure (2),procedure,

Whereas:

(1) To ensure consistency with Regulation (EU) No 648/2012 and to ensure the proper functioning of the internal market, it is necessary to lay down in Directive 2009/65/EU a uniform set of rules to address counterparty risk in derivative transactions performed by undertakings for collective investment in transferable securities (UCITS), where the transactions have been cleared by a central counterparty (CCP)CCP that is authorised or recognised under that Regulation. Directive 2009/65/EU imposes regulatory limits on counterparty risk only in respect of over-the-counterto (OTC)OTC derivative transactions, irrespective of whether the derivatives have been centrally cleared. As central clearing arrangements mitigate the counterparty risk that is inherent in derivative contracts, it is necessary to take into consideration whether a derivative has been centrally cleared by a CCP that is authorised or recognised under ▌that Regulation (EU) No 648/2012 and to establish a level playing-field between exchange traded and OTC derivatives, when determining the applicable counterparty risk limits. It is also necessary,necessary for regulatory and harmonisation purposes, to increaselift counterparty risk limits only when the counterparties use CCPs that are authorised in a Member State or recognised, in accordance with Regulation (EU) No 648/2012, to provide clearing services to clearing members and their clients.

(2) To contribute to the objectives of the capitalCapital marketsMarkets unionUnion it is necessary, for the efficient use of CCPs, to address certain impediments to the use of central clearing in Directive 2009/65/EU and to provide clarifications in Directives 2013/36/EU ▌2013/36/EU, and (EU) 2019/2034. The excessive reliance of the Union financial system on systemically important third-country CCPs (Tier 2 CCPs) could pose financial stability concerns that needneeds to be addressed appropriately. To ensure ▌the financial stability in the Union and adequately mitigate potential risks of contagion across the Union financial system, appropriate measures should therefore be introduced to foster the identification, management and monitoring of concentration risk arising from exposures towards CCPs. In that context, Directives 2013/36/EU and (EU) 2019/2034 should be amended to encourage institutions and investment firms to take the necessary steps to adapt their business model to ensure ▌the consistency with the new requirements for clearing introduced by the revision of Regulation (EU) No 648/2012 and to ▌overall enhance overall their risk management practices, also considering the nature, scope and complexity of their market activities. WhilstDirectives competent2013/36/EU authoritiesand already(EU) have2019/2034 ashould comprehensivealso setbe ofamended supervisoryto measuresfurther andclarify powersthe torole addressof deficienciescompetent authorities in theaddressing any excessive concentration risk managementthat practicesmay arise from exposures of credit institutions and investment firms, including thefirms requirementunder totheir havesupervision additionaltowards ownCCPs, fundsin ▌particular forthird-country risksCCPs that are notof substantial systemic importance to the Union or notone adequatelyor coveredmore of its Member States and offer services identified by the existingEuropean capitalSecurities requirements,and thoseMarkets measuresAuthority and(ESMA) powersas being of substantial systemic importance. Furthermore, competent authorities should be enhancedbetter equipped with additional, more specificgranular, tools and powers under ▌the Pillar 2 into theenable contextthem ofto excessivetake concentrationsuitable riskand arisingdecisive fromactions exposuresbased towardson CCPs.the conclusions of their supervisory assessments.

▌

(2a) Competent authorities should be empowered to review the plans which credit institutions and investment firms are required to develop, taking into account the methodology for the calibration of the active account requirement. To appropriately review such plans, competent authorities should have at their disposal the details of the level of clearing services identified as being of substantial systemic importance to be maintained in the active accounts in Union CCPs by financial and non-financial counterparties subject to the clearing obligation specified pursuant to Article 7a(5) of Regulation (EU) No 648/2012.

(3) Directives 2009/65/EU, 2013/36/EU and (EU) 2019/2034 should therefore be amended accordingly.

(4) Since the objectives of this Directive, namely ensuring that credit institutions, investment firms and their competent authorities adequately monitor and mitigate the concentration risk arising from exposures towards Tier 2 CCPs which offer services of substantial systemic importance and eliminating counterparty risk limits for derivative transactions that are centrally cleared by a CCP authorised or recognised in accordance with Regulation (EU) No 648/2012,648/2012 cannot be sufficiently achieved by the Member States but can rather, by reason of their scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality ▌proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives,

HAVE ADOPTED THIS DIRECTIVE:

Directive 2009/65/EC is amended as follows:

(1) in Article 2(1), the following point ▌(u) is added:

‘(u) ‘central counterparty’ (‘CCP’) means a CCP as defined in Article 2, point (1), of Regulation (EU) No 648/2012 of the European Parliament and of the Council*2.

___________

*2 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).;’1).’;

(2) Article 52 is amended as follows:

(a) in paragraph 1, second subparagraph, the introductory wording is replaced by the following:

‘ The‘The risk exposure to a counterparty of the UCITS in a derivative transaction that is not centrally cleared through a CCP authorised in accordance with Article 14 of Regulation (EU) No 648/2012 or recognised in accordance with Article 25 of that Regulation, shall not exceed either: ▌either:’;

(b) paragraph 2 is amended as follows:follows”

(i) the first subparagraph is replaced by the following:

‘ Member‘Member States may raise the 5 % limit laid down in paragraph 1,the first subparagraph,subparagraph toof paragraph 1to a maximum of 10 %. If they do so, however, the total value of the transferable securities and the money market instruments held by the UCITS in the issuing bodies in each of which it invests more than 5 % of its assets shall not exceed 40 % of the value of its assets. That limitation shall not apply to deposits or derivative transactions made with financial institutions subject to prudential supervision. ▌supervision.’;

(ii) in the second subparagraph, point (c) is replaced by the following:

‘(c) exposures arising from derivative transactions undertaken with that body that are not centrally cleared through a CCP authorised in accordance with Article 14 of Regulation (EU) No 648/2012 or recognised in accordance with Article 25 of that RegulationRegulation, ▌undertaken .’with that body.’.

Article 2

(1) in Article 74(1), [point (b)] is replaced by the following:

‘(b)“[(b)] effective processes to identify, manage, monitor and report the risks that they are or might be exposed to,to includingin environmental,the socialshort, medium and governancelong risksterm intime thehorizon, short,including mediumenvironmental, social and longgovernance term,risks, as well as concentration risk arising from exposures towards central counterparties, taking into account the conditions set out in Article 7a of Regulation (EU) No 648/2012 of the European Parliament and of the Council*1,;”

___________

*1 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1)..’;’1)..’;

(2) in Article 76(2), the following subparagraph is added:

‘ ‘Member States shall ensure that the management body develops specific plans and quantifiable targets in accordance with the requirementsproportions laidset downout in accordance with Article 7a of Regulation (EU) No 648/2012 to monitor and address the concentration risk arising from exposures towards central counterparties offering services of substantial systemic importance for the Union or one or more of its Member States.’;’States.’;

(3) in Article 81, the following paragraph is added:

‘ Competent‘Competent authorities shall assess and monitor developments the practices of institutionsinstitutions’ ▌practices concerning the management of their concentration risk arising from exposures towards central counterparties, including the plans developed in accordance with Article 76(2) of this Directive, as well as the progress made in adapting theirthe institutions’ business models to the ▌relevant policy objectives of the Union, taking into account the requirements laidset downout in Article 7a of Regulation (EU) No 648/2012;’648/2012’;

(4) in Article 100, the following paragraph ▌[5] is added:

‘ [5].‘[5]. EBA, in cooperationaccordance with ESMA,Article shall16 developof guidelinesRegulation (EU) No 1093/2010, in coordination with ESMA, in accordance with Article 16 of Regulation (EU) No 1093/20101095/2010, shall develop guidelines to specifyensure a consistent methodology for integrating the concentration risk arising from exposures towards central counterparties in the supervisory stress testing.';testing.”;

EBA shall issue those guidelines by ... [18 months from the date of entry into force of this amending Directive].”;”

(5) Article 104, (1) is amended as follows:

(5) Article 104(1) is amended as follows:

(a) the introductory wording is replaced by the following:

‘ For‘For the purposes of Article 97, Article 98(1), (4),point (5),(b), (9)Article 98(4), (5) and (10),(9), Article 101(4) and Article 102 of this Directive and of the application of Regulation (EU) No 575/2013, competent authorities shall have at least the power to: ▌to:’;

(b) the following point ▌[(n)] is added:

‘ [(n)]‘[(n)] require institutions, where the competent authority considers that there is excessive concentration risk towards a central counterparty,institutions to reduce exposures towards thata central counterparty or to realign exposures across their clearing accounts in accordance with Article 7a of Regulation (EU) No 648/2012648/2012, ▌where .;’the competent authority considers there is excessive concentration risk towards that central counterparty.’;

Article 3

“(b) effective processes to identify, manage, monitor and report the risks that investment firms are or might be exposed to, or the risks that they pose or might pose to others, including concentration risk arising from exposures towards central counterparties, taking into account the conditions set out in Article 7a of Regulation (EU) No 648/2012.”

(2) Article 29(1)29 (1) is amended as follows:

(a) the following point ▌(e) is added:

‘(e) material sources and effects of concentration risk arising from exposures towards central counterparties and any material impact on own funds.;’funds.’;

(b) the following subparagraph is added:

‘ ‘For the purpose of the first subparagraph, point (e), Member States shall ensure that the management body develops specific plans and quantifiable targets in accordance with the requirementsproportions laidset downout in accordance with Article 7a of Regulation (EU) No 648/2012 to monitor and address the concentration risk arising from exposures towards central counterparties offering services of substantial systemic importance for the Union or one or more of its Member States.”.”States.”;

(3) in Article 36(1), the following subparagraph is added:

‘ ‘For the purpose of the first subparagraph, point (a), competent authorities shall assess and monitor developments in the practices of investment firmsfirms’ ▌practices concerning the management of their concentration risk arising from exposures towards central counterparties, including the plans developed in accordance with Article 29(1), point (e), of this Directive as well as the progress made in adapting theirthe investment firms’ business models to the ▌relevant policy objectives of the Union, taking into account the requirements laidset downout in Article 7a of Regulation (EU) No 648/2012.’;’648/2012.’;

(4) Article 39(2) is amended as follows:

(a) the introductory wording is replaced by the following:

‘ For‘For the purposes of Article 29, ▌point (e), Article 36, Article 37(3) and Article 3839 of this Directive and of the application of Regulation (EU) 2019/2033,No 575/2013, competent authorities shall have at least the power to:;’to:’;

(b) the following point ▌(n) is added:

‘(n) require investment firmsinstitutions to reduce exposures towards a central counterparty or to realign exposures across their clearing accounts in accordance with Article 7a of Regulation (EU) No 648/2012, where the competent authority considers that there is excessive concentration risk towards that central counterparty.;’counterparty.’;

Article 4

Transposition

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by … [[PO: ▌please 18insert the date = 12 months fromafter the date of entry into force of the EMIR Review Regulation] at the latest. They shall immediatelyforthwith communicate to the Commission the text of those provisions.

When Member States adopt those provisions, they shall contain a reference to this Directive or shall be accompanied by such a reference on the occasion of their official publication. TheMember methodsStates ofshall makingdetermine how such reference shall be laid downis byto Memberbe States.made.

2. Member States shall communicate to the Commission the text of the main measuresprovisions of national law which they adopt in the field covered by this Directive.

Article 5

Done at Brussels,

For the Commission

The President Ursula VON DER LEYEN

ANNEX: LIST OF ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that she has received input from the following entities or persons in the preparation of the report, until the adoption thereof in committee:

Entity and/or person

ABN AMRO Clearing Bank

Alternative Investment Management Association (AIMA)

Association Française Des Marchés Financiers (AMAFI)

Assonime, the Association of Italian Joint-Stock Companies

Bank of America

Banque de France

Blackrock

BNP Paribas

BNY Mellon

Bundesverband deutscher Banken (BdB)

BVI Bundesverband Investment und. Asset Management

Cboe Clear Europe

Citigroup

Commodity Markets Council Europe (CMCE)

Crédit Agricole

Depository Trust and Clearing Corporation (DTCC)

Deutsche Bank AG

Deutsche Börse AG

Deutsches Aktieninstitut

DG FISMA

Euronext Clearing

European Association of Central Counterparty Clearing Houses (EACH)

European Association of Corporate Treasurers (EACT)

European Banking Federation (EBF)

European Central Bank (ECB)

European Economic and Social Committee (EESC)

European Federation of Energy Traders (EFET)

European Fund and Asset Management Association (EFAMA)

European Securities and Markets Authority (ESMA)

European Systemic Risk Board (ESRB)

FIA European Principal Traders Association

FleishmanHillard

French Tresor

FTI Consulting

Goldman Sachs

Hanbury Strategy

HM Treasury

Intercontinental Exchange (ICE)

International Swaps and Derivatives Association (ISDA)

Intesa Sanpaolo

Joint Energy Associations Group (JEAG)

JPMorgan Chase & Co

KDPW CCP Spółka Akcyjna

Kreab

LCH

LCH SA

NASDAQ

Nordic Securities Association

Permanent Representation of Belgium

Permanent Representation of France

Permanent Representation of Germany

Permanent Representation of Spain

Permanent Representation of the Netherlands

Société Générale

UK Mission to the European Union

UniCredit

The list above is drawn up under the exclusive responsibility of the rapporteur.

PROCEDURE – COMMITTEE RESPONSIBLE

Title

Amending Directives 2009/65/EU, 2013/36/EU and (EU) 2019/2034 as regards the treatment of concentration risk towards central counterparties and the counterparty risk on centrally cleared derivative transactions

References

COM(2022)0698 – C9-0411/2022 – 2022/0404(COD)

Date submitted to Parliament

8.12.2022

Committee responsible

Date announced in plenary

ECON

1.2.2023

Committees asked for opinions

Date announced in plenary

JURI

1.2.2023

Not delivering opinions

Date of decision

JURI

31.1.2023

Rapporteurs

Date appointed

Danuta Maria Hübner

25.1.2023

Discussed in committee

5.6.2023

28.6.2023

30.8.2023

Date adopted

28.11.2023

Result of final vote

+:

–:

0:

47

3

3

Members present for the final vote

Rasmus Andresen, Anna-Michelle Asimakopoulou, Gunnar Beck, Marek Belka, Isabel Benjumea Benjumea, Stefan Berger, Engin Eroglu, Markus Ferber, Jonás Fernández, Frances Fitzgerald, José Manuel García-Margallo y Marfil, Claude Gruffat, José Gusmão, Enikő Győri, Eero Heinäluoma, Danuta Maria Hübner, Stasys Jakeliūnas, France Jamet, Othmar Karas, Billy Kelleher, Ondřej Kovařík, Georgios Kyrtsos, Aurore Lalucq, Philippe Lamberts, Pedro Marques, Denis Nesci, Luděk Niedermayer, Lefteris Nikolaou-Alavanos, Kira Marie Peter-Hansen, Eva Maria Poptcheva, Antonio Maria Rinaldi, Dorien Rookmaker, Alfred Sant, Joachim Schuster, Ralf Seekatz, Pedro Silva Pereira, Paul Tang, Irene Tinagli, Inese Vaidere, Johan Van Overtveldt, Roberts Zīle

Substitutes present for the final vote

Ivars Ijabs, Janusz Lewandowski, Andżelika Anna Możdżanowska, Erik Poulsen, René Repasi

Substitutes under Rule 209(7) present for the final vote

Barry Andrews, Alessandra Basso, Theresa Bielowski, Carlos Coelho, Francisco Guerreiro, Fabienne Keller, Liudas Mažylis

Date tabled

5.12.2023

FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

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