1. ESMA shall establish a Joint Monitoring Mechanism for the exercise of the tasks referred to in paragraph 2.

The Joint Monitoring Mechanism shall be composed of: 

(a) representatives of ESMA; 

(b) representatives of EBA and EIOPA; 

(c) representatives of the ESRB, the ECB and the ECB in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Regulation (EU) No 1024/2013; and 

(d) representatives of the central banks of issue of currencies, other than the euro, in which the derivative contracts referred to in Article 7a(6) are denominated.

In addition to the entities referred to in the second subparagraph of this paragraph, the central banks of issue of the currencies of denomination of the derivative contracts referred to in Article 7a(6), other than those listed in point (d) of that second subparagraph, the national competent authorities supervising the obligation under Article 7a, limited to one per Member State, and the Commission may also participate in the Joint Monitoring Mechanism as observers.

ESMA shall manage and chair the meetings of the Joint Monitoring Mechanism. The Chair of the Joint Monitoring Mechanism may, upon the request of the other members of the Joint Monitoring Mechanism or on the Chair’s own initiative, invite other authorities to participate in the meetings when relevant to the topics to be discussed.

2. The Joint Monitoring Mechanism shall:

(a) monitor the implementation at aggregate Union level of the requirements set out in Articles 7a and 7c, including all of the following:

(i) the overall exposures and reduction of exposures to substantially systemically important clearing services identified pursuant to Article 25(2c); 

(ii) developments related to clearing in CCPs authorised under Article 14 and access to clearing by clients to such CCPs, including fees charged by such CCPs for establishing accounts pursuant to Article 7a and any fees charged by clearing members to their clients for establishing accounts and undertaking clearing pursuant to Article 7a; 

(iii) other significant developments in clearing practices having an impact on the level of clearing at CCPs authorised under Article 14;

(b) monitor the cross-border implications of client clearing relationships, including portability and clearing members’ and clients’ interdependencies and interactions with other financial market infrastructures; 

(c) contribute to the development of Union-wide assessments of the resilience of CCPs focussing on liquidity, credit and operational risks concerning CCPs, clearing members and clients; 

(d) identify concentration risks, in particular in client clearing, due to the integration of Union financial markets, including where several CCPs, clearing members or clients use the same service providers; 

(e) monitor the effectiveness of the measures aimed at improving the attractiveness of Union CCPs, encouraging clearing at Union CCPs and enhancing the monitoring of cross-border risks.

The bodies participating in the Joint Monitoring Mechanism, the college referred to in Article 18 and national competent authorities shall cooperate and share the information necessary to carry out the tasks referred to in the first subparagraph of this paragraph.

Where that information is not available to the Joint Monitoring Mechanism, including the information referred to in Article 7a(9), the relevant competent authority of authorised CCPs, their clearing members and their clients shall provide the necessary information enabling ESMA and the other bodies participating in the Joint Monitoring Mechanism to perform the tasks referred to in the first subparagraph of this paragraph.

3. Where a relevant competent authority does not have the requested information, it shall require authorised CCPs, their clearing members or their clients to provide that information. The relevant competent authority shall forward such information to ESMA without undue delay. 

4. Subject to the agreement of the relevant competent authority, ESMA may also request the information directly from the relevant entity. ESMA shall forward all information received from that entity to the relevant competent authority without undue delay. 

5. Information requests to CCPs shall be exchanged via the central database.

6. ESMA shall, in cooperation with the other bodies participating in the Joint Monitoring Mechanism, submit an annual report to the European Parliament, the Council and the Commission on the results of its activities under paragraph 2. 

The report referred to in the first subparagraph may include recommendations for potential Union-level actions to address identified horizontal risks.

7. ESMA shall act in accordance with Article 17 of Regulation (EU) No 1095/2010 in the event that, on the basis of the information received as part of the Joint Monitoring Mechanism and following the discussions held therein, ESMA:

a) considers that competent authorities fail to ensure clearing members’ and clients’ compliance with the requirements set out in Article 7a; or 

(b) identifies a risk to the financial stability of the Union due to an alleged breach or non-application of Union law.

Before acting in accordance with the first subparagraph of this paragraph, ESMA may issue guidelines or recommendations pursuant to Article 16 of Regulation (EU) No 1095/2010.

8. Where ESMA, on the basis of the information received as part of the Joint Monitoring Mechanism and following the discussions held therein, considers that compliance with the requirements set out in Article 7a does not effectively ensure the reduction of Union clearing members’ and clients’ excessive exposure to Tier 2 CCPs, it shall review the regulatory technical standards referred to in Article 7a(8) and, where necessary, set an appropriate adaptation period not exceeding 12 months.