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  • European Securities and Markets Authority Consults on EMIR 2.2 Technical Advice

    The European Securities and Markets Authority has launched consultations on proposed technical advice on third-country CCP tiering, comparable compliance and fees under draft revisions to the European Market Infrastructure Regulation, known as EMIR 2.2. EMIR 2.2 will change the requirements for the supervision of both EU and third-country CCPs, and includes the controversial formal EU "location policy" for CCPs. The text of EMIR 2.2 was agreed between the European Parliament, the Council of the European Union and the European Commission on March 13, 2019, but has not yet been published in the Official Journal of the European Union. However, the European Commission requested technical advice from ESMA on May 3, 2019 and ESMA has begun that preparatory work. The consultations close on July 29, 2019. ESMA intends to submit its final reports and technical advice to the European Commission in Q3 and Q4 2019.

    The consultation on tiering of CCPs

    EMIR 2.2 will introduce a two-tier system for third-country CCPs whereby ESMA will categorize each CCP as either a non-systemically important CCP (Tier 1 CCP) or a systemically important CCP (Tier 2 CCP). Tier 1 CCPs will continue to operate under EMIR's existing equivalence framework. Tier 2 CCPs will be subject to additional requirements, most notably, a line-by-line application of all the prudential, conduct of business, governance and margin requirements that are applicable to EU CCPs, as well as the interoperability rules. EMIR 2.2 sets out the criteria that ESMA must take into account when deciding to which tier a third-country CCP belongs. The Commission is empowered to adopt a delegated act to further specify the criteria that ESMA must consider (the "tiering criteria delegated act").

    The proposed technical advice in this consultation paper is intended to assist the Commission in preparing the tiering criteria delegated act. ESMA is proposing 14 indicators to further specify the criteria to assess whether a third-country CCP is systemically important or likely to become systemically important for the financial stability of the Union or of one or more of its Member States. For each indicator, ESMA proposes a set of factors to be considered. ESMA also provides examples of the type of information it would request from a third-country CCP so that it can carry out the assessment.

    Consultation on comparable compliance

    Tier 2 CCPs are subject to additional requirements under EMIR 2.2, including a requirement to comply with various requirements unless ESMA assesses that the CCP's compliance with its third-country framework satisfies the relevant EMIR requirements. The consultation responds to the European Commission's request to provide technical advice to assist in the preparation of a delegated act setting out the minimum elements to be assessed, and the modalities and conditions for the assessment.

    ESMA proposes that the delegated act: (i) provides clarifications as to the scope of the comparable compliance assessment; (ii) establishes a four-step approach to the assessment; (iii) sets out the minimum elements that the assessment should cover, which would be a set of provisions under EMIR and the relevant technical standards; (iv) stipulates that the assessment should be based as much as possible on the information provided by the CCP in its request for the assessment; (v) sets out the deadlines for requesting and completing the assessment; and (vi) sets out the minimum information that should be contained in a request for comparable compliance.

    The consultation on third-country CCP fees

    EMIR 2.2 will introduce supervisory powers for ESMA over third-country CCPs and requires third-country CCPs to pay fees for the supervisory and administrative tasks that ESMA undertakes as a result of this change. This consultation responds to the Commission's request for technical advice for the delegated act on such fees. The delegated act must set out the types of fees, the matters for which fees are due, the amount of the fees and the manner in which fees are to be paid by an applicant third-country CCP, a Tier 1 CCP and a Tier 2 CCP. ESMA's consultation paper sets out the activities that it will undertake in its new role, the costs associated therewith and proposed fees.

    View the consultation paper on tiering of CCPs.

    View the consultation paper on comparable compliance.

    View the consultation paper on ESMA fees for third-country CCPs.

    View the politically agreed text of EMIR 2.2.

    View details of the Commission's original EMIR 2.2 proposal.

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