ESMA: reports on shadow banking, leverage and pro-cyclicality

ESMA published a report on securities financing transactions, leverage and pro-cyclicality in EU markets. ESMA recommendations include:introduce the Financial Stability Board’s qualitative standards in the methodology used to calculate haircuts; address the pro-cyclicality of collateral haircuts in central counterparties in the context of the EMIR review;assess the possible extension of the FSB’s scope for numerical haircut floors, in particular to government bonds, and the calibration of these floors using SFTR data which will become available in 2018; and assess pro-cyclicality and the potential need for further policy tools once sufficient data becomes available.