The European Association of CCP Clearing Houses (EACH) has responded to the ESMA consultation on the clearing and derivative trading obligations in view of the 2022 status of the benchmark transition.

The key messages expressed by EACH its feedback are the following:

• EACH supports ESMA’s proposal to extend the scope of the EU clearing obligation to certain Overnight Index Swaps (OIS) that reference SOFR and TONA and subsequently removing contracts referencing USD LIBOR. We have no objections with regards to the timing proposed for the entry into force of such requirement.
• The proposed modification reflects the latest developments in the market, which has observed a significant increase in USD SOFR and TONA liquidity as well as in the portion of SOFR risk traded and cleared by market participants ahead of the USD LIBOR cessation.
• EACH Members believe that the assessment of the EMIR criteria is correct and that no underlying foundations of the clearing obligation have changed, beyond the inherent to the RFR change.
• EACH has no objections with the proposed dates for when the modifications will come into force. We believe that there is no need to introduce an additional phase-in order to ensure an orderly and timely implementation of the changes to the scope of the clearing obligation

For more information, please see the responses attached or visit the EACH website at www.eachccp.eu