Featured Product

    EC Welcomes Political Agreement on Effective Supervision of CCPs

    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

    Featured Experts
    Related Articles
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    News

    FDIC Approves Proposal to Amend Swap Margin Rule

    FDIC approved what would be a joint proposal by the US Agencies (FCA, FDIC, FED, FHFA, and OCC) to amend regulations that require swap dealers and security-based swap dealers under the agencies’ respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared (Swap Margin Rule).

    September 17, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 848 and 470

    FASB proposed taxonomy improvements for the proposed Accounting Standards Update on topic 848 on facilitation of effects of reference rate reform on financial reporting.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Statement on Recalculating Transitional Measures Under Solvency II

    BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Paper on Embedded Supervision of Blockchain-Based Financial Market

    BIS published a working paper that investigates ways to regulate and supervise blockchain-based financial markets.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Paper on Market-Implied Systemic Risk and Shadow Capital Adequacy

    BoE published a working paper that presents a forward-looking approach to measure systemic solvency risk.

    September 13, 2019 WebPage Regulatory News
    News

    HKMA Consults on Policy Module on Pillar 2 Supervisory Review Process

    HKMA is consulting on the revised Supervisory Policy Manual module CA-G-5 that sets out the HKMA approach to conducting the supervisory review process under Pillar 2.

    September 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3830