EU Temporary Equivalence Decisions for UK CCPs and CSDs
12/19/2018The European Commission has adopted temporary equivalence decisions determining that the U.K. regulatory frameworks applicable to central counterparties and central securities depositories will be deemed equivalent to EU standards under the European Market Infrastructure Regulation and the Central Securities Depositories Regulation, respectively, in the event of a no-deal Brexit. The decision is based on the EU’s determination that: (i) the U.K.’s supervisory arrangements are equivalent to the EU’s, as it has onshored EMIR and the CSD Regulation into U.K. law; (ii) the supervision of U.K. CCPs and CSDs is effective as the Bank of England will continue to act as the key supervisor of CCPs and CSDs in the U.K.; and (iii) the U.K.’s third country recognition regime is equivalent to the EU’s regime, given the implementation of the EU regime through the onshored EU legislation. The EU has decided that, in the event of a no-deal Brexit, the U.K. will be granted temporary equivalence for the CCP regime until March 30, 2020 and for the CSD regime until March 30, 2021. The Decisions take effect from December 21, 2018.
The Bank of England has published a statement welcoming the EU’s equivalence decisions, acknowledging that it provides clarity and addresses a key financial stability risk emerging from Brexit. The Bank of England notes that the U.K. has already established a temporary recognition regime for non-U.K. CCPs and a transitional regime for non-U.K. CSDs, meaning EU CCPs and CSDs can continue to provide services in the U.K. in the event of a no-deal Brexit.
View the EU's Equivalence Decision on U.K. CCPs.
View the EU's Equivalence Decision on U.K. CSDs.
View the Bank of England's Statement on the equivalence decisions.
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