European Commission publishes draft regulation on CCP transitional period
19 April 2018 Brussels
Image: Shutterstock
The European Commission has published a draft implementing regulation to extend the transitional period for own funds requirements for exposures to central counterparties (CCPs).
If the regulation is adopted, the transitional period will be extended by an additional six months until 15 December 2018.
According to the draft, the implementing regulation will help to avoid disruption to international financial markets and to prevent penalising institutions by subjecting them to higher own funds requirements during the processes of recognition of existing third-country CCPs.
Previous EU regulation requires certain third country CCPs to report, for a limited period of time, the total amount of initial margin they have received from their clearing members.
Of the CCPs established in third countries that have applied for recognition, 32 have been recognised by the European Securities and Markets Authority.
The remaining third-country CCPs are still awaiting recognition, which will not be completed by the time the current transitional period ends on 15 June 2018.
If the transitional period is not extended, institutions established in the EU with exposures to those remaining third country CCPs will be required to increase their own funds for those exposures significantly, potentially resulting in the withdrawal of those institutions as direct participants to those CCPs, according to the draft.
Comments on the draft regulation are due by 15 May 2018.
If the regulation is adopted, the transitional period will be extended by an additional six months until 15 December 2018.
According to the draft, the implementing regulation will help to avoid disruption to international financial markets and to prevent penalising institutions by subjecting them to higher own funds requirements during the processes of recognition of existing third-country CCPs.
Previous EU regulation requires certain third country CCPs to report, for a limited period of time, the total amount of initial margin they have received from their clearing members.
Of the CCPs established in third countries that have applied for recognition, 32 have been recognised by the European Securities and Markets Authority.
The remaining third-country CCPs are still awaiting recognition, which will not be completed by the time the current transitional period ends on 15 June 2018.
If the transitional period is not extended, institutions established in the EU with exposures to those remaining third country CCPs will be required to increase their own funds for those exposures significantly, potentially resulting in the withdrawal of those institutions as direct participants to those CCPs, according to the draft.
Comments on the draft regulation are due by 15 May 2018.
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