EC Deems UK Framework for CCPs Temporarily Equivalent to EMIR Rules
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012). The Decision (2020/1308) shall enter into force on the day following that of its publication in the Official Journal of the European Union. The Decision shall apply from January 01, 2021 and expire on June 30, 2022. In a separate statement, BoE welcomed the adoption of this equivalence decision on the future UK legal and supervisory framework for central counterparties.
BoE states that this decision will allow European authorities to finalize the remaining steps for recognition of UK central counterparties. This will enable UK central counterparties to continue to provide clearing services to their EU members and EU banks to continue meet their obligations to UK central counterparties. In the UK, HM Treasury and BoE have already put in place a temporary recognition regime for non-UK central counterparties. From January 01, 2021, this will enable EU central counterparties to continue to provide services in the UK. As part of the recognition process, BoE and ESMA have agreed on an updated Memoranda of Understanding regarding cooperation and information-sharing arrangements with respect to central counterparties. The MoU also takes effect from January 01, 2021.
The EC decision is intended to give financial market participants 18 months to reduce their exposure to UK central counterparties. The heavy reliance of the EU financial system on services provided by UK-based central counterparties raises important issues related to financial stability and requires the scaling down of EU exposures to these infrastructures. Therefore, EC strongly encourages the industry to work together in developing strategies that will reduce their reliance on UK central counterparties that are systemically important for EU. On January 01, 2021, UK will leave the Single Market and this temporary equivalence decision is intended to protect financial stability in EU.
Related Links
Keywords: Europe, EU, UK, Banking, Securities, Brexit, CCPs, OTC Derivatives, Systemic Risk, Equivalence Regime, EMIR, Decision 2020/1308
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
