EC to Extend Transitional Provisions on Exposures to CCPs Under CRR
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.
Related Links
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
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
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards