ESMA has published its latest consultation on Indirect Clearing Arrangements under both EMIR and MIFIR. The consultation paper covers both ETD and OTC derivatives and is designed to ensure consistency between the two regimes.
The paper looks at “longer chains” and states that:
“The requirements applicable to a direct client would need to be extended to all the intermediaries between the clearing member and the counterparty at the end of the chain. This means in particular that the provisions related to default management apply throughout the chain, including the requirement to protect through contractual arrangements, to the extent possible, what is owed to the indirect client in relation to the indirect clearing services from the insolvency of any of the intermediary clients providing clearing services.”
For more information please refer to the Consultation Paper.