ISDA on Call to Extend Temporary Equivalence Determination for UK CCPs
ISDA and 13 other financial services trade associations wrote a letter to EC Vice President Valdis Dombrovskis to highlight the need for an urgent extension to the temporary equivalence determination for UK central counterparties (CCPs). The signatories of the letter argued that without a seamless ability to continue to clear transactions across borders in the event of a no-deal, Brexit will have a significant impact on companies and on the safety and soundness of the financial system. The current temporary equivalence expires on March 30, 2020. The letter urged EC to confirm that it intends to extend the temporary recognition as soon as possible and in any event well in advance of the end of December 2019.
Without the extension, EU clearing members would not be able to continue as direct members of UK CCPs in the event of a no-deal Brexit and EU counterparties would not be able to clear derivatives subject to the clearing obligation on those CCPs. The date of Brexit has been extended until January 31, 2020. Despite the significant work that firms have done to prepare, the reasons for granting temporary recognition still exist and a post-Brexit extension of only two months is unlikely to be sufficient to mitigate the potential risk of disruption to EU clearing services.
The letter requested EC to extend the temporary equivalence for UK CCPs until the new framework for recognition of non-EU CCPs under European Market Infrastructure Regulation (EMIR) 2.2 has become applicable and ESMA has completed its review of the existing recognition decisions. It is important for EC to provide this certainty in a timely fashion, for the purpose of maintaining financial stability in the event of a "No Deal" Brexit. This is also an important bridging measure to ensure that the transitional, anti-disruption protections for EU counterparties, which have been negotiated under EMIR 2.2, will be available in the event that the UK is not ultimately found to be equivalent or in the event that UK CCPs are not able to obtain recognition. The trade associations that signed the letter include the Association of Financial Markets in Europe, the Alternative Investment Management Association, the European Banking Federation, and the European Fund and Asset Management Association.
Related Links
Keywords: International, Europe, UK, Banking, Securities, Brexit, CCPs, EMIR2, FMI, Equivalence Regime, FMI, ISDA
Related Articles
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.