The European Commission is grappling with the issue of whether the European Securities and Markets Authority has the power to determine which over-the-counter derivatives must be centrally cleared. While article 4 of the OTC regulation suggests ESMA has the authority to make the decision, Patrick Pearson, head of the EC’s financial markets infrastructure unit, said, “Legal advice seems to dictate that it cannot be ESMA that makes the decision. It has to be the EC.”
