EU CCP Recovery and Resolution Regulation Published
01/22/2021The EU Regulation on the recovery and resolution of CCPs has been published in the Official Journal of the European Union. The Regulation sets out the rules and procedures for the recovery and resolution of EU CCPs authorized under the European Market Infrastructure Regulation. The aim of the Regulation is the establishment of a framework for the orderly recovery of a CCP through implementation of recovery plans. A CCP's recovery plan will form part of its operational rules, which are agreed with its clearing members. A CCP's operating rules must also ensure the enforceability of the recovery measures outlined in the recovery plan, including to contracts or assets governed by the law of a third country or to third-country entities.
If the recovery measures do not restore the CCP's viability, the CCP's resolution authority will have the power to take action to ensure the continuity of the CCP's critical functions and, if needed, resolve the CCP. This includes setting up bridge CCPs. In the event of losses arising under a resolution, these will be borne by a CCP's owners, creditors and counterparties in line with the hierarchy of claims in insolvency. The CCP recovery and resolution framework would apply to all CCPs established in the EU. It is not proposed that the recovery and resolution framework would apply to the wider group of a CCP.
The Regulation will apply directly across the EU from August 12, 2022, subject to certain exceptions, including:
- the extension until July 3, 2021 of the CCP and trading venue open access transitional provision for exchange-traded derivatives under the Markets in Financial Instruments Regulation, which will apply retrospectively from July 4, 2020; and
- the amendments to EMIR providing LIBOR transition-related safe harbours for the replacement of interest rate benchmarks in legacy trades, which will apply from February 11, 2021. Other amendments to EMIR, such as the new provisions on suspension of clearing obligation in the case of resolution, will apply from August 12, 2022.
View the EU CCP Recovery and Resolution Regulation.
View details of the proposed EU CCP Recovery & Resolution Regulation.
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