Central Counterparties (CCPs) meaning

Special resolution regime for central counterparties Consult Practice Note: Special resolution regime for central counterparties. For a summary of the special resolution...

Financial services developments ESMA consults on CCP collateral and investment policy standards following EMIR 3 review The European Securities and Markets Authority (ESMA) has initiated a public consultation on draft regulatory technical standards (RTS) to amend Commission Delegated Regulation 153/2013, following the European Market Infrastructure Regulation (EMIR 3) review. The call for input invites feedback on: conditions for central counterparties (CCPs) to accept public guarantees, public bank guarantees and commercial bank guarantees as collateral; criteria under which debt instruments qualify as eligible financial instruments within CCP investment policy; highly secured arrangements for emission allowances lodged as margins or default fund contributions. EMIR 3 makes permanent a broader range of guarantees eligible as collateral and extends scope to clients of CCPs that are non-financial counterparties. The consultation closes on 30 April 2026, with ESMA submitting final draft RTS to European Commission by end-2026...

EU financial services developments ESMA consults on CCP collateral and investment policy standards following EMIR 3 review The European Securities and Markets Authority (ESMA) has opened a public consultation on draft regulatory technical standards (RTS) intended to amend Commission Delegated Regulation 153/2013, following the European Market Infrastructure Regulation (EMIR 3) review process. It also invites feedback on the circumstances under which central counterparties (CCPs) may accept public guarantees, public bank guarantees, and commercial bank guarantees as collateral; the criteria under which debt instruments qualify as eligible financial instruments for a CCP’s investment policy; and the use of highly secured arrangements for emission allowances lodged as margins or default fund contributions. EMIR 3 permanently widens the categories of guarantees recognised as eligible collateral and expands the framework to include clients of CCPs that are non-financial counterparties. The call for input closes on 30 April 2026, with ESMA expected to submit the final draft RTS to the European Commission for consideration by end-2026...

This FLASHCARD is designed to help you take in and retrieve the essential points on the recognition of UK central counterparties (CCPs) under Regulation (EU) 648/2012 (EU EMIR). How did Brexit affect the EU market for clearing services? Before Brexit, three UK CCPs—London Clearing House (LCH), LME Clear and ICE Clear Europe—held a dominant role in the EU market for derivatives clearing. As at June 2017, it was estimated that UK CCPs cleared roughly 90% of euro-denominated interest rate swaps for euro area counterparties, and 40% of their euro-denominated credit default swaps. When the implementation period ended on 31 December 2020, UK CCPs were no longer under EU supervision and became third country CCPs for the purposes of EU EMIR. Article 25(1) of EU EMIR provides that a...

Background to Financial Services and Markets Act 2023 The Financial Services and Markets Act 2023 (FSMA 2023) delivers significant reforms to the UK’s regulatory architecture for financial services. It cancels retained/assimilated EU-derived rules in this field and empowers HM Treasury, alongside the financial services regulators, to substitute them with measures tailored for UK markets, building on the UK’s established regulatory model (see Practice Note: The Financial Services and Markets Act 2023—essentials). The accompanying Explanatory Notes explain that FSMA 2023 preserves the UK’s status as a competitive marketplace with strong regulatory standards by, among other steps, giving the Bank of England (BoE) new instruments to lessen risks arising from the failure of critical financial institutions. FSMA 2023 obtained Royal Assent on 2 June 2023, yet different provisions commence on varying dates, as indicated in section 86 and in subsequent commencement statutory instruments (SIs). Parts of the special resolution regime (SRR) for central counterparties (CCPs) began to apply from 29 August 2023, although a commencement SI is still awaited for the...

Special resolution regime toolkit The Bank of England (BoE) leads the response when banks, building societies and designated investment firms supervised by the Prudential Regulation Authority (PRA) fail, using a process called resolution, which is separate from insolvency, and is described in the Bank of England’s approach to resolution (published 15 December 2023). The BoE will trigger resolution where intervention is required to safeguard financial stability. The framework does not aim to prevent all failures; rather, it ensures that, when they occur, they are managed in an orderly way that seeks to avoid deploying public money to prop up failed banks. Under the special resolution regime (SRR), the most suitable tool must be chosen for resolving or winding up a failed bank, including combinations of tools where appropriate. Through secondary legislation implementing the Financial Services Act 2012 and the Bank Recovery and Resolution Directive 2014/59/EU (EU BRRD), the SRR has been extended, with modifications, to building societies and investment firms. In addition, recognised central counterparties (CCPs) are subject to...