The Regulation highlights that to ensure that commercial terms are reasonable, ensuring unbiased and rational contractual arrangements, fees, prices, and discounts should be based on objective criteria, including volumes cleared, clearing patterns and needs and requirements of a client. To avoid unbalanced pricing structures and conflicts of interests, fees, prices and discounts should be carefully designed. Fees charging costs to clients should clearly distinguish between costs directly related to the provision of clearing services to the client concerned and costs related to the provision of clearing services in general, separately for each cost item, including IT costs, licensing costs and costs for collateral management.
The Regulation will apply from 9 March 2022.
The International Swaps and Derivatives Association (ISDA) has published two papers examining key aspects of the ESG investment market with the aim of establishing solid standards and best practices for this sector.
The papers focus on key performance indicators (KPIs) for sustainability-related derivatives and accounting treatment for ESG transactions:
- the first document proposes Guidelines for the drafting of KPIs. Sustainability-related derivatives match cash flows on conventional hedging instruments with the achievement of specific ESG objectives using KPIs to measure compliance. The paper sets out principles to ensure that these KPIs are specific, measurable, verifiable, transparent and suitable.
- The second paper analyses the current accounting treatment of ESG investments and the impact on related derivatives.