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IPE special report May 2018

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'I understand', commissioner Hill tells pension funds on EMIR concerns

The European Commission will feed pension funds’ calls for a permanent exemption from central clearing obligations into a review of the European Market Infrastructure Regulation (EMIR) that is coming to a close, commissioner Jonathan Hill told delegates at a PensionsEurope conference in Brussels today.

“I know pension funds have called for a permanent exemption from some of EMIR’s rules on central clearing,” he said. “I understand your concern.”

He made the comments as part of a summary of feedback the Commission received to a consultation on how financial services legislation was working, and how the Commission was responding to this.

“Respondents to our Call for Evidence have said that, overall, the measures put in place following the crisis are working well, but that, in places, our legislation is not proportionate enough, that it could be weighing down the amount of financing available to the wider economy and that the compliance burden is too heavy,” he said. 

The feedback also indicated the need for the Commission to take care with further reforms to avoid reducing market liquidity, added Hill.

Introducing the conference before Hill’s arrival, Janwillem Bouma, chair of PensionsEurope and managing director of two Shell pension funds in the Netherlands, emphasised the need for a “proportionate regulatory environment that reflects the specificities of pension funds, which have a social purpose”.

EMIR was one of the pieces of EU financial legislation Bouma said should be changed, arguing that its interaction with bank capital rules were having a negative impact on pension funds.

“At present, the cumulative impact of bank capital requirements and EMIR is overly burdensome for pension funds,” said Bouma. 

Hill has previously said “it should be possible to make EMIR more proportionate” while still mitigating systemic risk in derivatives markets.

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