In its response, FESE urges ESMA to consider the overall impact the work on the EMIR Clearing Obligation will ultimately have on the final implementation of the MiFIR Trading Obligation, since any instrument which does not fall under the scope of the EMIR Clearing Obligation will not be eligible for the MiFIR Trading Obligation.

In particular, FESE does not believe that there should be a blank exclusion of OTC equity derivatives from the clearing obligation. In addition, FESE argues that ESMA’s proposed framework is silent on the risk of exchange traded derivatives, which have been historically centrally cleared and traded on transparent venues, shifting from those regulated venues to OTC environments due to their different regulatory treatment vis-à-vis look-alike contracts traded OTC. FESE considers both of these issues to be at odds with the objectives set out by the G20 and implemented by EMIR and MiFID II/MiFIR.

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