March 15, 2019

EC welcomed the political agreement reached by European Parliament and EU member states to ensure a more robust and effective supervision of central counterparties (CCPs) offering services in EU. The Presidency and the Parliament reached a provisional agreement on how EU and third-country clearing houses should be supervised in the future, considering the effects of Brexit on the European financial system. The new rules will be implemented through a revision of European Market Infrastructure Regulation (EMIR) and a revision of the statute of the European System of Central Banks (ESCB) and ECB.

The reform is intended to strengthen CCP considering the growing size, complexity, and cross-border dimension of clearing in Europe. The agreed text establishes a CCP supervisory committee in ESMA; the committee will be composed of an independent Chair, competent authorities of member states with an authorized CCP, and two independent members. The text also strengthens the existing system for recognizing and supervising third-country clearing houses. It introduces a "two tier" system differentiating between non-systemically important CCPs and systemically important CCPs. To be recognized and authorized to operate in the EU, the tier 2 CCPs would be subject to stricter rules, including the following:

  • Compliance with the necessary prudential requirements for EU-CCPs while taking into account third-country rules
  • Confirmation from the relevant EU central banks that the CCP complies with any additional requirements set by those central banks
  • Agreement of a CCP to provide ESMA with all relevant information and to enable on-site inspections, in addition to the necessary safeguards confirming that such arrangements are valid in the third country

On the basis of a fully reasoned assessment, ESMA would also be able to recommend that a CCP or some of its clearing services are of such substantial systemic importance that the CCP should not be recognized. EC could decide, as a measure of last resort, that CCP will need to establish itself in EU. At present, 16 CCPs are established and authorized in the EU. Additional 32 third-country CCPs have been recognized under the equivalence provisions of EMIR, allowing these CCPs to offer services in EU. Following Brexit, three CCPs based in UK will de facto become third-country CCPs. Further technical work will follow this political agreement before the European Parliament and the Council can formally adopt the final text. 

 

Related Links

Keywords: Europe, EU, Banking, Securities, CCPs, EMIR, Brexit, Tier 2 CCPs, Systemic Risk, European Parliament, European Council, ESMA, ECB, EC

Related Articles
News

EBA Report Assesses Regulatory Framework for Fintech Activities

EBA published the findings of its analysis on the regulatory framework applicable to fintech firms when accessing the market.

July 18, 2019 WebPage Regulatory News
News

OSFI Revises Capital Requirements for Operational Risk for Banks

OSFI is revising its capital requirements for operational risk, in line with the final Basel III revisions published by BCBS in December 2017.

July 18, 2019 WebPage Regulatory News
News

OSFI Consults on Revised Principles for Management of Liquidity Risk

OSFI proposed revisions to Guideline B-6 on the principles for the management of liquidity risk.

July 18, 2019 WebPage Regulatory News
News

ESMA Guidance on Disclosures for Credit Rating Sustainability Issues

ESMA published the technical advice on sustainability considerations in the credit rating market, along with the final guidelines on disclosure requirements applicable to credit ratings.

July 18, 2019 WebPage Regulatory News
News

FASB Issues Q&A on Estimation of Expected Credit Losses by Firms

FASB issued a second question-and-answer (Q&A) document that addresses more than a dozen frequently asked questions related to the Accounting Standards Update No. 2016-13 titled “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”

July 17, 2019 WebPage Regulatory News
News

US Agencies Delay Enforcing Volcker Rule Restrictions on Foreign Funds

US Agencies (FDIC, FED, and OCC) announced that they will not take action related to restrictions under the Volcker Rule for certain foreign funds for an additional two years.

July 17, 2019 WebPage Regulatory News
News

SRB Announces SRF Receives Cash Injection, Grows to EUR 33 billion

SRB announced that the Single Resolution Fund (SRF or the Fund) received a cash injection of EUR 7.8 billion from 3,186 institutions in 2019, bringing the total amount in the Fund to about EUR 33 billion.

July 17, 2019 WebPage Regulatory News
News

FASB to Propose to Delay CECL Compliance Deadline for Certain Entities

FASB published a summary of the tentative decisions taken at its Board meeting in July 2019.

July 17, 2019 WebPage Regulatory News
News

IMF Publishes Report on 2019 Article IV Consultation with Vietnam

IMF published its staff report in context of the 2019 Article IV consultation with Vietnam.

July 16, 2019 WebPage Regulatory News
News

European Parliament Elects Next President of European Commission

European Parliament elected Ursula von der Leyen from Germany as the first female President of the next European Commission for a five-year term from November 01, 2019.

July 16, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3476