On June 2, the European Securities and Markets Authority (ESMA) published a final report setting out technical advice to the European Commission (EC) on the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms for the provision of clearing services (the Report).

In the Report, ESMA sets out how conditions under which the commercial terms for the provision of clearing services are to be determined as FRANDT. In doing so, ESMA aims to balance the need to improve clearing clients’ access to clearing services and ensure that these services are provided on FRANDT compliant terms, while also ensure that the requirements are proportionate and within their mandate.

ESMA notes that the requirements covered in the technical advice address concerns of clearing clients and clearing service providers and aim to:

  1. facilitate comparability of the information disclosed;
  2. address the process of onboarding clearing clients;
  3. standardize the information disclosed to clients bilaterally; and
  4. encourage further standardization of contractual terms.

EMIR Refit introduced a requirement for clearing members and clients who provide clearing services to do so under FRANDT terms by June 2021. The EC was mandated to develop a delegated act specifying the conditions under which commercial terms are to be considered to be FRANDT terms and asked ESMA to provide technical advice on the FRANDT terms as input for developing the delegated act.

The Report has now been sent to the EC.

The Report is available here.