We understand that the industry jargon can be difficult to navigate so we hope that this glossary will be helpful.

CCP/Clearing House
A central counterparty is intended to eliminate counterparty risk by acting as the counterparty in all instances to both the buyers and sellers in the market. This means that the buyer and seller do not have to be concerned about whom they trade with as if one party defaults then the central counterparty will manage and absorb the loss.

The central counterparty manages the risk via margining and collateral management processes as well as having a centralised default fund and/or insurance.

Committee of European Securities Regulators. An independent committee established by the European Commission on 6th June 2001 until 1st January 2011 when it transformed into ESMA (see below).
Clearing House
The term clearing house and central counterparty are often interchanged but are not always synonymous. Broadly speaking clearing involves the management of post-trading processes and the associated exposures prior to settlement such as a potentially failed trade. However not all clearing houses act as central counterparties.
Commission Delegated Act
The EU legislator (generally, the European Parliament and the Council) have the power to delegate to the European Commission the power to adopt non-legislative acts of general application that supplement or amend certain non-essential elements of a legislative act.
Commission Implementing Act
Responsibility for implementing legally binding EU acts lies primarily with EU countries. However, some legally binding EU acts require uniform conditions for the implementation. In these cases, the Commission or, where required, the Council is empowered to adopt implementing acts.
The Committee of Permanent Representatives is a body of the Council of the EU and all issues must pass through COREPER before they are included on the agenda for a Council meeting. COREPER has two configurations, COREPER I and COREPER II which deal with different issues. COREPER II deals with economic and financial matters; therefore will examine issues before being passed onto ECOFIN. In COREPER II the Member States are represented by their Permanent Representatives in Brussels.
Council of Ministers
Another term for the Council of the EU. When dealing with Financial Markets legislation this would be composed of the Finance Ministers from each country.
Central Securities Depository. CSDs are involved in guaranteeing the correct settlement of trades. They receive trade details from Clearing Houses or directly from exchanges and then ensure that the buyer gets their stock and the seller gets their payment.
CSDR/CSD Regulation
Central Securities Depository Regulation. Drafted by the European Commission in March 2012 with an indicated deadline of 2020 for implementation, the legislation aims to harmonise settlement systems across Europe.
European Banking Authority. Replacing the Committee of European Banking Supervisors (CEBS), the EBA is concerned with the stability of the financial system, market and financial product transparency and the protection of depositors and investors. It is one of the ESAs (see below) that came into being on the 1st January 2011.
European Central Bank.
Economic and Financial Affairs Council. Composed of the Member States’ Economics and Finance Ministers, they are concerned mostly with economic policy, economic surveillance, the Euro and financial markets. Also responsible with the European Parliament for the EU budget.
Economic and Monetary Affairs Committee of the European Parliament. Performs most of the Parliament’s work in economic matters, playing a key role in shaping EU financial markets law.
European Economic and Social Committee. A consultative body of the European Union that informs the Council, Commission and Parliament on issues from an economic, social and civic perspective. ;
European Market Infrastructure Regulation. Regulation on OTC derivatives, central counterparties and trade repositories.
European Supervisory Authority. Three including ESMA were established on 1st January 2011.
European Securities and Markets Agency. An independent EU authority that replaced the Committee of European Securities Regulators (CESR), ESMA is primarily mandated with safeguarding the stability of the EU’s financial system. It is one of the ESAs that came into being on 1st January 2011 and is part of the European System of Financial Supervisors.
European Commission
The European Commission is the executive arm of the European Parliament and can consult on and propose new legislation to the European Parliament and the Council. The Commission also ensures that EU law is correctly applied by member countries.
Council of the EU
Created in 1974 but an official institution of the EU since 1st December 2009, the Council defines the EU’s political agenda but does not exercise legislative functions. Composed of the Heads of State, the Council President and the President of the European Commission, it meets twice every six months.
European Parliament
The only directly-elected EU institution, the EP decides on the vast majority of EU legislation on an equal weighting with the Council of the EU. ;
Financial Transaction Tax. Although financial transaction taxes already exist in some markets, there has been a renewed push post the financial crisis to impose taxes on financial transactions at a national level or via a harmonised EU initiative to introduce a levy on financial transactions. In the post crisis environment this was first introduced by France in 2012.
Initiative between clearing houses to give the users choice about where they clear and to circumvent the need to have both sides of a trade clear through the same CCP. Interoperability exists between certain European CCPs but not all. It is not governed by any particular legislation.
Investment Services Directive 1993. The precursor to MiFID.
Level 1
Framework legislation for a Directive or Regulation that is proposed by the European Commission and adopted by the EU Council and European Parliament. Level 1 text will specify whether the Commission is given legislative power to construct Level 2 measures.
Level 2
Secondary legislation tasked to the Commission with the assistance of specialist committees to supplement the Level 1 framework. Overseen by the Council and Parliament. It may involve the creation of binding technical standards, a text which is drafted by the relevant ESA and considered by the Commission.
Level 3
Period of extensive consultation with the ESAs in advising the Commission on Level 2 requirements before the advice is finalised.
Level 4
The enforcement of the legislation; the proper transposition of directives and application of EU legal requirements which is overseen by the European Commission and supported where required by the ESAs.
Markets in Financial Instruments Directive. Member states have to transpose the measures within the directive into local law and practice.
The revised Markets in Financial Instruments Directive following a review of MiFID, is known as MiFID II. It is passing through EU legislative process alongside MiFIR and designed to be implemented at the same time.
Markets in Financial Instruments Regulation. As a Regulation rather than a Directive, the contents within the regulation will take effect across the EU without direct implementation into local law by member states, and as such is not as open to interpretation as a directive.
Multilateral Trading Facility. Established by MiFID in 2007, it is a new type of trading venue that is subject to regulation mandating how trades are executed.
National Competent Authority; the Domestic Regulator in each country.
Official Journal
The Official Journal of the European Union (OJ) is the authoritative source of EU law.
Over-the-counter contracts are those where financial instruments are traded directly between two parties, off-exchange. However the definition of an OTC trade varies between asset classes.
Organised Trading Facility. Established as a new concept by MiFID II, OTFs are trading systems but differ from MTFs as they allow the operator an element of discretion over how a transaction is executed.
Plenary sittings in the European Parliament occur monthly and take form in debates and votes. When a legislative act is brought to plenary, it is near completion as the MEPs discuss and/or vote on the act to be adopted. Plenary sessions also occur in other committees and organisations.
Regulated Market
Established by MiFID in 2007, it is a trading system which is operated and/or managed by a market operator subject to regulation mandating how trades are executed. Regulated markets usually offer both trading and listing.
Short Selling Regulation. Entered into force on 14th March 2012 and implementation commenced from 1st November 2012. The SSR aims to harmonise the European framework by increasing the transparency of short positions and reduce risks linked with naked short selling.
Target 2 Securities. A new settlement platform to be created by European Central Bank that centralises Eurozone securities transactions into a single system.
Technical Standards
Technical standards form the Level 2 legislation and add depth and clarity to the Level 1 legislative framework. They take the form of both regulatory and implementing technical standards. Once reviewed and adopted by the European Commission, regulatory technical standards are subject to a month of scrutiny from the European Parliament and Council whereas implementing technical standards are not reviewed by the European Parliament or Council. The implementing technical standards are dependent on their associated regulatory technical standards. In order to take effect, both types of standard must be published in the Official Journal of the European Union and enter into force on the twentieth day following their publication.
Third Country
A country that is not a European Member State that acts as a third party in agreement between the European Union and the European countries.
Trade Repository
Introduced by EMIR legislation, trade repositories are centralised databases that collect and maintain records of over-the counter (OTC) derivatives.
The process of member states implementing European directives into local law.
Informal, tripartite process between the European Parliament, Council and Commission in which the terms and text of new legislation is agreed. There are two different types of trilogue meetings: technical meetings deal with points of law whilst political meetings deal with major issues of policy.