UK Legislation Made to Onshore EMIR 2.206/26/2020The U.K. has published Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020 to onshore the new EU regime for third-country CCPs introduced by amendments to the European Market Infrastructure Regulation, known as EMIR 2.2. EMIR 2.2, which has applied since January 1, 2020, 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.
The U.K. Regulations onshore the EMIR 2.2 changes to CCP supervision, including on-shoring powers to the Bank of England to place third-country CCPs in different tiers, as either Tier 1 (lower risk) or Tier 2 (systemically important). The Regulations also give the BoE power to decide that a third-country CCP is too systemically important to provide services in the U.K. without being incorporated in the U.K. This onshores the controversial EU CCP location policy, which the U.K. Government did not support while EMIR 2.2 was being developed. In its explanatory memorandum, HM Treasury states that it is unlikely that the BoE would ever use the location policy powers in practice.
Various other new enforcement powers from EMIR 2.2. are not onshored into the U.K. in this measure, presumably since these are largely already available to U.K. regulators (e.g. under the Financial Services and Markets Act 2000). It remains to be seen how the U.K. will onshore three delegated acts under EMIR 2.2, which were recently adopted by the European Commission.
The BoE is also granted the ability to assess before the end of the transitional period (i.e. December 31, 2020) third-country CCP recognition applications made within the Temporary Recognition Regime in line with the new EMIR 2.2 provisions.
View the Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020 (SI 2020/646).
View the explanatory memorandum.
View the impact assessment.
You may like to see a consolidated mark-up of U.K. EMIR, which is available in our Brexit Resource Center.
View further details of EMIR 2.2.
View the Commission's adopted delegated act on tiering of third-country CCPs.
View the Commission's adopted delegated act on comparable compliance and annex.
View the Commission's adopted delegated act on fees for third-country CCPs.
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