EC is consulting on the implementing regulation on extension of transitional provisions related to own funds requirements for exposures to central counterparties (CCPs). The draft regulation extends the transitional provisions in Article 497(1) of the Capital Requirements Regulation or CRR (575/2013) by 12 months, until June 28, 2022. The feedback period on the draft regulation ends on May 26, 2021 while the final regulation shall apply from June 29, 2021, as stated in the draft text.
Article 497(1) of CRR established a transitional period during which institutions may treat exposures to third-country CCPs as exposures to qualifying CCPs. For third-country CCPs that submitted their application for recognition in accordance with Article 25(6) of European Market Infrastructure Regulation (EMIR) before June 27, 2019, specifically all third-country CCPs still awaiting recognition by ESMA, the transitional period is set to expire on June 28, 2021. EC has not yet adopted decisions in accordance with Article 25(6) of EMIR for some of the jurisdictions in which those third-country CCPs are established. Such decisions are a prerequisite for ESMA to recognize third-country CCPs. Since those decisions will not be adopted by June 28, 2021, ESMA will not be able to complete by that date the recognition procedures for the third-country CCPs awaiting recognition. Therefore, it is necessary to extend the transitional provisions in Article 497(1) of CRR. The extension of transitional provisions would leave time for EC to finalize its equivalence assessments in accordance with Article 25(6) of EMIR and to adopt equivalence decisions where conditions thereof are met. It would also leave time for ESMA to recognize the concerned third-country CCPs. Where a positive equivalence decision would not be adopted by EC, an extension would give time to institutions to prepare for the end of the transitional period provided for in Article 497(1) of CRR.
Comment Due Date: May 26, 2021
Keywords: Europe, EU, Banking, Securities, CRR, Basel, CCP Exposures, Transitional Provisions, EMIR, Central Counterparty, Regulatory Capital, Own Funds Requirement, ESMA, EC
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