Trade Associations Recommend Changes to European Commission Buy-in Regime

ISDA, FIA and the FIA European Principal Traders Association (collectively, "the Associations") raised concerns regarding the impact of proposals forming part of the European Commission’s review of the Regulation (EU) No 909/2014 (the "CSDR") and its mandatory buy-in regime.

In a joint letter, the Associations explained that their primary concern is the application of the CSDR mandatory buy-in regime to a party transferring margin for a derivatives transaction. The Associations stated that the ambiguity of the definition of "transaction" and the absence of an express carve-out for margin transfers supporting derivative transactions create uncertainty regarding the scope of the buy-in regime.

The Associations requested that the European Commission modify the CSDR regime to remove from the scope of the mandatory buy-in regime (i) margin transfers supporting derivatives transactions and (ii) the physical settlement of derivatives contracts. Additionally, the Associations asserted that the inclusion of emissions allowances in the scope of the CSDR settlement discipline regime may serve as "an impediment to the future development and expansion of the market."