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
Previous Article
DNB Issues Additional Data Quality Checks for Fourth Quarter of 2019Related Articles
EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
FASB Proposes to Delay Implementation of Insurance Contracts Standard
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB Set Out Recommendations for Benchmark Transition
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS Sets Out Recommendations for Benchmark Transition for Insurers
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA Updates Reporting Manual on European Single Electronic Format
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).
EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis
EBA published a statement on resolution planning in light of the COVID-19 pandemic.
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
ECB Guideline on Materiality Threshold for Credit Obligations Past Due
ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.
FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act
FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.
