Shearman & Sterling LLP | FinReg | European Commission Publishes Draft Delegated Regulation on Fees Charged to Third-Country Central Counterparties
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  • European Commission Publishes Draft Delegated Regulation on Fees Charged to Third-Country Central Counterparties
    06/11/2020
    The European Commission has published a draft delegated regulation on the fees charged by the European Securities and Markets Authority to central counterparties established in third-countries that are recognized by ESMA and able to provide clearing services in the EU. The draft regulation will supplement the European Market Infrastructure Regulation. EMIR was revised twice during 2019. The second revision (known as EMIR 2.2) introduced changes to the procedures and authorities involved in the authorization of CCPs and the requirements for the recognition of third-country CCPs. EMIR 2.2, is part of the EU’s push to enhance the regulation of CCPs amid concerns regarding potential CCP failures given their increasing systemic importance and is widely regarded as a direct response to Brexit, given that three of the largest European CCPs are based in the U.K. Feedback on the draft delegated regulation can be submitted until July 9, 2020.

    EMIR 2.2 requires ESMA to charge third-country CCPs certain fees associated with applications for recognition and annual fees associated with the performance of ESMA’s tasks in supervising recognized third-country CCPs. The draft delegated regulation sets out the thresholds for these fees and the payment conditions (including timing and currency of payment). A third-country CCP will be required to pay a recognition fee of €50,000, and, if it is classed as “Tier 2” (meaning it is deemed to be systemically important), it must pay an additional recognition fee of €360,000. Annual fees will be calculated on the basis of ESMA’s estimated expenditure for supervising the class of CCP to which the relevant CCP belongs (either Tier 1 or Tier 2).

    The draft delegated regulation differs from the approach proposed in ESMA’s technical advice. Recognition fees are lower in total, because comparable compliance costs will be covered by the additional recognition fee for Tier 2 CCPs. There will also be no discount available for Tier 2 CCP annual fees on the basis of comparable compliance, and those annual fees will take account of the Tier 2 CCP’s annual turnover.

    The Commission has also published for feedback a draft delegated regulation on comparable compliance and another on the criteria for determining whether a third-country CCP is systemically important.

    View the draft delegated regulation on fees for third-country CCPs.

    View details of the draft delegated regulation on criteria for determining whether a third-country CCP is systemically important.

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