FIA and ISDA responded to the European Commission (EC)’s consultation on the draft Delegated Act and accompanying Annex to specify the conditions under which the commercial terms for clearing services for OTC derivatives are to be considered to be fair, reasonable, non-discriminatory and transparent (FRANDT). In their joint response, the associations thank the EC for considering previous feedback on the ESMA Final Report on FRANDT and for making pragmatic changes and refinements in a number of important areas of FRANDT, which will make the rules more proportionate. We also highlight remaining critical issues that we expect the EC to consider before the FRANDT rules are finalised. Those include the questions on (i) territorial scope, (ii) application of FRANDT to new/prospective clients only, (iii) implementation period and (iv) proposed requirements regarding refusal of clearing orders, suspension, liquidation or close out of client positions and notice periods.
