Supervision of financial market infrastructures
Article from BaFin's 2017 annual report
Central counterparties
In January 2017, Eurex Clearing AG (ECAG) applied to BaFin to have its original authorisation under the European Market Infrastructure Regulation (EMIR)1 extended to include the clearing of over-the-counter foreign exchange (OTC FX) products. Since this is a new product category, ECAG had to adapt and expand the risk management for the products to be cleared. BaFin reviewed the application together with the Deutsche Bundesbank, held consultations in the ECAG-EMIR supervisory college and authorised the extension in November 2017.
ESMA stress test for CCPs
CCPs in Europe are well positioned to withstand market turbulence. That was the result of ESMA's second EU-wide stress test published on 2 February 2018. The aim was to verify whether the European CCPs hold adequate prefunded collateral and liquidity to be resilient to the default of the two most important clearing members throughout the EU, even during periods of extreme market movements and with simultaneous price shocks. ESMA concluded that the CCPs would be capable of dealing with such a scenario. It was unable to detect any contagion effects on non-defaulted clearing members that had a share in the losses through default funds or because of obligations to make additional payments. The test also revealed that the European CCPs had adequate resources to cover the liquidity requirement if the two most important clearing members or liquidity providers defaulted.
The stress test was triggered by EMIR, under which ESMA has to perform such a stress test once a year. A total of 16 European CCPs, including two in Germany, were assessed.
EU authorisation procedure for CSDs
The authorisation of European central securities depositories (CSDs) will be delayed to the second half of 2018 or even into 2019. This is because almost all the applications for authorisation were incomplete. The European CSDs had to submit to the competent supervisory authorities their application documents for new registration of their CSD core services and banking-type ancillary services – required in accordance with the Central Securities Depositories Regulation (CSDR)2 – by the end of September 2017. The competent authorities (including BaFin), in consultation with the central banks and other supervisory authorities whose involvement may be required, have to make a decision on the applications within six months of receipt of the complete set of documents.
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