ESMA final report on FRANDT commercial terms for clearing services


0n 2 June 2020, the European Securities and Markets Authority (ESMA), has published its final report with technical advices to the European Commission on the “Fair, Reasonable, Non-Discriminatory and Transparent” (FRANDT) commercial terms for the provision of clearing services.

As part of a broader effort to facilitate access to clearing, the EMIR review (Refit), has introduced the requirement for clearing members and clients who provide clearing services to do so under FRANDT terms by June 2021. The European Commission is mandated to develop a delegated act to define the requirements for such FRANDT terms and tasked ESMA in June 2019 with producing technical advice on the FRANDT terms as input for the development of the delegated act.

In the first version of the Technical advices (subject to consultation in 2019), ESMA considered that all information intended for clients (the management process, the criteria used to define the client’s risk profile, the client’s classification, general contractual terms, technical requirements, pricing structure, additional services, etc.) were to be available on the clearing service provider’s public site.

The final version revisits this principle while structuring the onboarding process. The public information will be those already required under EMIR and MIF2, plus a presentation of the onboarding process, some key commercial terms and a template to submit a RFP ; It should be noted that ESMA has abandoned the idea of client classification.