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

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.