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The European Association of CCP Clearing Houses (EACH) welcomes the opportunity to provide feedback to the ESMA consultation on highly liquid financial instruments with regards to the investment policy of central counterparties published in the context of EMIR Refit Level 2. In summary, EACH Members:
- Consider that the consultation provides an accurate description of CCP practices regarding their investment and collateral policies.
- Concerning the fact that more than half of EU CCPs invest 90% of their financial resources in central bank deposits, EACH Members highlight that CCPs’ access to central banks facilities constitutes a critical key component that should be supported from a policy making perspective in the interest of financial stability and integrity, and call for more standardization in this context.
- Suggest ESMA to consider expanding the conditions applicable to highly liquid financial instruments to covered bonds.
- Suggest ESMA to reconsider the list of financial instruments in order to include all MMFs (EU and third-country) that meet certain requirements and improve CCPs’ liquidity and risk management, as long as the issue of “gates” – amongst others – is addressed and CCPs take an adequate risk-based approach towards the products they invest in.
- Suggest ESMA to extend the average time to maturity of highly liquid financial instruments to 5 years.
For more information, please find the EACH response attached or visit the EACH website www.eachccp.eu
