London - The Investment Management Association (IMA) said a set of draft technical standards from the European Securities and Markets Authority (ESMA), known as EMIR Level 2, brought some clarity to a complex area but still needed changes.

Commenting on ESMA's "Draft Technical Standards for the Regulation on OTC Derivatives, Central Counterparties and Trade Repositories", IMA Director of Markets Jane Lowe called for enabling clearing houses to be able to identify owners of positions in the event of defaults.

"This is a good first set of Technical Standards for EMIR bringing clarity and order to a complex area of work," Lowe said.

"However we would favour a clearing approach where the clearing house can at all times identify the true owner of positions and assets so that porting of these can occur with certainty in the event of a clearing member default," added Lowe, herself a former regulator.

"This provides critical added protection for the investor. Currently the structure obscures the identity of the client which makes it much more difficult for assets to be returned to the rightful owner in a default situation."

The EMIR regulation is intended to reduce the risk associated with the OTC derivatives market and establish common rules for central counterparties and trade repositories.

The IMA also said it challenged the view that investors were not ready for central clearing, saying the reasons they have not yet engaged were because contractual terms are not attractive and the development of legally secure arrangements by the CCPs for individual client segregated accounts are not yet adequate.