Final Report on Guidelines on the Summary of Resolution Plans for Central Counterparties

23 June 2023 ESMA91-372-2345 12 May 2022 ESMA91-372-1630 Final Report Guidelines on the summary of resolution plans

2 Table of Contents Executive Summary................................................................................................................................. 4 2. Background...................................................................................................................................... 6 3. Scope of the Guidelines .................................................................................................................. 7 4. Content of the Guidelines ................................................................................................................ 8 4.1 Guideline 1: General considerations of relevance and proportionality.................................... 8 4.1.1 Responses to proposed Guideline 1 under consultation paper ...................................... 9 4.1.2 ESMA feedback statement to Guideline 1..................................................................... 10 4.2 Guideline 2: Default and non-default events scenarios......................................................... 10 4.2.1 Responses received on proposed Guideline 2 under the consultation paper............... 12 4.2.2 ESMA feedback statement ............................................................................................ 12 4.3 Guideline 3: Content of the summary – Key elements.......................................................... 13 4.3.1 Responses received on proposed Guideline 3 under consultation paper..................... 13 4.3.2 ESMA feedback statement ............................................................................................ 13 5. Annexes......................................................................................................................................... 14 5.1 Annex 1 – Legislative provisions ........................................................................................... 14 5.2 Annex 2 – Cost and benefit analysis ..................................................................................... 15 5.2.1 Responses received on cost and benefit analysis ........................................................ 18 5.2.2 ESMA feedback statement ............................................................................................ 19 5.3 Annex 3 – Advice of the Securities and Markets Stakeholder Group ................................... 20 5.4 Annex 4 –Guidelines ............................................................................................................. 20 ........................................................................................................................................................... 21

1. Scope............................................................................................................................................. 22
2. Legislative references, abbreviations and definitions.................................................................... 23 2.1 Legislative references............................................................................................................ 23 2.2 Abbreviations ......................................................................................................................... 23 2.3 Definitions .............................................................................................................................. 24
3. Purpose ......................................................................................................................................... 24
4. Compliance and reporting obligations ........................................................................................... 25
5. Guidelines on the Summary of Resolution Plans .......................................................................... 26 5.1.1 Guideline 1: General considerations of relevance and proportionality.......................... 26 5.1.2 Guideline 2: Default and non-default events scenarios................................................. 27 5.1.3 Guideline 3: Content of the summary – key elements................................................... 27 5.1.4 Annex A – To the Guidelines: Template of Summary of the Resolution Plan............... 27

3 Legislative references CCPRRR Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/11321 EMIR European Market Infrastructures Regulation – Regulation (EU) 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories2 ESMA Regulation Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC.3 Abbreviations CM Clearing Member CCP Central Counterparty ESMA European Securities and Markets Authority ESRB European Systemic Risk Board EU European Union OJ The Official Journal of the European Union Definitions Unless otherwise specified, the terms used in this final report have the same meaning as in CCP RRR and EMIR. 1 OJ L 22, 22.1.2021, p. 1 2 OJ L 201, 27.7.2012, p. 1 3 OJ L 331, 15.12.2010, p. 84–119

4 Executive Summary Reasons for publication The resolution plan shall provide for the resolution actions that the resolution authority may take where the CCP meets the conditions for resolution referred to in Article 22 of CCPRRR. However, the key elements of the plan shall be disclosed to the CCP through a summary of the resolution plan. In accordance with Article 12(7)(a) of Regulation (EU) 2021/23 (CPPRRR) the resolution plan shall include a summary of the key elements of the plan, distinguishing between default events, non-default events and a combination of the two. In accordance with Article 12(8) of CPPRRR the information in the summary shall be disclosed to the CCP concerned. The CCP may express its opinion in writing on the resolution plan to the resolution authority and that opinion shall be included in the plan. These Guidelines provide resolution authorities with guidance as to the type of information that should be included in the summary (and a template of the summary) that would be shared with the CCP in accordance with Article 12(8) of the CCPRRR. These Guidelines are based on Article 16 of Regulation (EU) No 1095/2010 (ESMA Regulation) according to which ESMA shall, with a view of to establishing consistent, efficient and effective supervisory practices within the European System of Financial Supervision (ESFS), and to ensuring the common, uniform and consistent application of Union law, issue guidelines addressed to all competent authorities or all financial market participants. On 19 May 2022, ESMA launched a public consultation on the draft Guidelines with the deadline for consultation responses on 1 August 2022. This Final Report (and the accompanying guidelines) assesses and takes into account, where suitable the feedback provided by the three respondents to the consultation. Moreover, ESMA also sought advice on the draft Guidelines from the Securities and Markets Stakeholder Group in accordance with Article 16(2) of ESMA Regulation, but none was received. Contents Section I of the report presents the background to the Guidelines, Section II covers the scope of the Guidelines and Section III presents the Content of the Guidelines. Sections 4 entails the Annexes: the relevant legislative provisions (Annex 1), the Cost and Benefit analysis (Annex 2), the Advice of the Securities and Markets Stakeholder Group (Annex 3) and the Guidelines (Annex 4) including a template for the summary of the resolution plan (Annex A).

5 Next Steps The Guidelines will apply after their publication by ESMA on its website in the official languages of the European Union. Pursuant to Article 16(3) of ESMA Regulation, competent authorities must inform ESMA of whether they (i) comply, (ii) do not comply but intend to comply, or (iii) do not comply and do not intend to comply with these Guidelines. In case of non-compliance, competent authorities must state their reasons for non-compliance, within two months from the date of publication of the Guidelines on ESMA’s website in EU official languages of their reasons for not complying with the Guidelines.

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1. Background
2. The objective of the resolution framework is to ensure that CCPs maintain the continuity of the critical functions of a CCP which is failing or likely to fail while avoiding a significant adverse effect on the stability of the financial system and its ability to serve the real economy and ultimately minimising the cost of a CCP failure to taxpayers.
3. Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties4 (‘CCPRRR’) was published in the OJ on 22 January 2021 and it entered into force on 12 February 2021.
4. Resolution is covered under several articles under CCPRRR, and Article 12 of CCPRRR contains the requirements for resolution plans and Article 12(7) of CCPRRR sets out in point (a) to (s) the elements the resolution plan shall contain.
5. As stated by the mandate in paragraph 9 of Article 12 of CCPRRR, ESMA shall further specify the content of the resolution plans in draft regulatory technical standards on the content of Resolution Plans5 , in accordance with paragraph 7 of Article 12 of CCPRRR.
6. The CCP should be aware of the key elements of the plan to ensure an effective cooperation, and to have an overview of the resolution authority's intentions with regard to the different resolution scenarios and strategies envisaged to be applied in a resolution, what aspects are planned to be addressed and how this may affect the continuity of the CCP’s critical functions.
7. The objective of the summary of the key elements is for the CCP to be informed of the key aspects of the plan that may have an impact on the CCP or are otherwise relevant for the CCP to be aware of when ensuring crisis management preparedness. Article 12(8) of CCPRRR provides that the summary, referred to in point (a) of paragraph 7 of Article 12 of CCPRRR, shall be disclosed to the CCP and the summary shall contain the key elements of the resolution plan. The summary shall distinguish between default events, non-default events and a combination of the two. The summary should therefore provide a set of elements that enable the CCP to understand the resolution plan and should contain essential information that is constructive for the CCP.
8. Paragraph 8 of Article 12 of CCPRRR further provides that the CCP may express its opinion in writing on the resolution plan to the resolution authority. That opinion shall be included in the plan. 4 Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (Text with EEA relevance) (OJ L 22, 22.1.2021, p. 1). 5 Draft RTS on the content of CCP resolution plans (Article 12(9) of the CCPRRR). Final report available at https://www.esma.europa.eu/document/final-report-draft-rts-content-resolution-plans.

7 8. On 19 May 2022, ESMA launched a public consultation on the draft Guidelines with the deadline for consultation responses on 1 August 2022. The public consultation aimed at receiving stakeholders' feedback on a list of questions and on the draft Guidelines. 9. This Final Report, and the accompanying Guidelines, assesses and takes into account, where suitable, the feedback provided by the three respondents to the consultation. Moreover, ESMA also sought advice on the draft Guidelines from the ESMA’s Securities and Markets Stakeholder Group in accordance with Article 16(2) of ESMA Regulation but none was received. 2. Scope of the Guidelines 10. While there is no specific mandate in the CCPRRR requiring ESMA to further specify the content nor a template for the summary of the resolution plan, according to Article 16(1) of ESMA Regulation6 , ESMA shall, with a view of to establishing consistent, efficient and effective supervisory practices within the European System of Financial Supervision (ESFS), and to ensuring the common, uniform and consistent application of Union law, issue guidelines addressed to all competent authorities or all financial market participants. 11. The summary should contain information that is helpful, needed or relevant to the CCP as the resolution planning undertaken by the resolution authority is another process very distinct from the CCP’s own management plans. The resolution of a CCP is activated once the conditions set out under Article 22(1) of CCPRRR are fulfilled, pointing to a very severe situation where the CCP is failing or is likely to fail. Where the CCP’s plans have either failed or are otherwise considered not efficient enough or suitable, the resolution plan may be activated in accordance with Article 22(1) of CCPRRR, with the aim to maintain the critical functions of a CCP which is failing or likely to fail in order to preserve financial stability and avoid a significant adverse effect on the financial system and its ability to serve the real economy while minimising the cost to taxpayers of a CCP failure. 12. These Guidelines aim to establish a common framework indicating the principles and the format of the summary of the resolution plan by providing a template for the summary of the resolution plan. This will enable resolution authorities responsible for drafting the resolution plan to share, in accordance with Article 12(8) of CCPRRR, the information in the plan in a manner that provides the CCP with the information of the key elements as envisaged under Article 12(7) (a) of CCPRRR. 13. It is noted that the aim of the Guidelines is to provide guidance to the resolution authority on what could be considered key elements of the plan and hence be included in the summary, as well as to ensure that a convergent approach in sharing information with the 6 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC

8 CCPs is achieved by providing principles and templates to be used in the drafting of the summary. 14. The Guidelines aim to simplify coordination and ensure efficiency in the resolution planning. It is, however, the resolution authority that will determine what are the specific key elements of the plan to be shared with the concerned CCP. 15. When developing Guidelines, ESMA shall have due regard to the principle of proportionality, where relevant. Hence, the Guidelines will not prescribe a fixed list of aspects to be covered by the summary as such a list would not be able to give the resolution authority the flexibility it needs to ensure the summary is reflecting the resolution plan for the CCP at hand as the content of the resolution plan will depend on each CCP’s risk and organisational profile, products cleared, business model and membership. 16. ESMA has considered that the Guidelines should, as drafted, provide sufficient flexibility to ensure the summary is suitable for the CCP’s profile, including its risk profile and also the nature and complexity of the CCP. Hence, they comply with the proportionality requirement. 17. The summary is part of the resolution plan and as such follows the same decision procedure as the resolution plan as provided by Article 14 of CCPRRR. The information on the key elements of the plan to be shared with the CCP under the summary (part of the resolution plan) is the decision of the resolution authority after consultation with the competent authority and in coordination with the resolution college. 3. Content of the Guidelines 3.1 Guideline 1: General considerations of relevance and proportionality 18. The addressee of the summary of the resolution plan is, in accordance with Article 12(8) of CCPRRR, the CCP, and the summary should therefore be visually clear and concise for the CCP without having access to the full resolution plan, thereby allowing the CCP to easily understand what the key elements of the resolution plan are, as well as the core strategies of the resolution plan. 19. The summary shall contain the key elements in relation to the different scenarios considered in the plan, distinguishing between default events, non-default events and a combination of the two. In addition, all the key elements to be found under the points (b) to (s) under paragraph 7 of Article 12 CCPRRR should be included in the summary, although only with the level of detail relevant for the CCP to understand the key features of the resolution plan. Therefore, the summary should not include a comprehensive description of the whole resolution plan.

9 20. Hence, the summary needs to be succinct, to respect the fact that only the key elements are disclosed, but at the same time explanatory, so that the resolution plan is understandable. To this end, it is preferable that comments or explanations regarding key elements are brief and give way to an overview of what aspects have been taken into account in developing the CCP's resolution plan. 21. The Guidelines allow resolution authorities to adapt the summary to the conditions and organisation of each particular CCP. The Guidelines present a list that the resolution authority should at least consider in establishing the summary of the resolution plan. The list under the Guidelines is not an exhaustive list, hence the resolution authority may add aspects considered material and relevant for the CCP. 22. Therefore, the Guidelines contain guidance in view of establishing an appropriate summary of the key elements of the resolution plan. At the same time sufficient flexibility is left to the resolution authorities so that the summary can be tailored to each CCP in a proportionate manner bearing in mind the specificities of the concerned CCP. 3.1.1 Responses to proposed Guideline 1 under consultation paper Guideline 1 The summary of the key elements of the plan referred to in Article 12(7)(a) of CCPRRR should be drafted respecting the following principles on relevance: The summary should inform the CCP of the key elements and should provide the CCP with an overview of the plan, in particular with a view to share information in relation to the following: (i) the different resolution scenarios and strategies envisaged to be applied in a resolution, (ii) what resolution actions are planned to be taken and how they may affect the CCP, (iii) where there are expectations that the CCP will cooperate in the resolution process and (iv) how the resolution measures may affect the continuity of the CCP’s functions. The summary should make the CCP aware of the key actions that the CCP should be ready to perform and of the data that the CCP should be ready to submit. The summary of the resolution plan should focus on the essential information that is likely to have a material impact on the CCP’s recovery and crisis management planning. The summary should be succinct with a focus on the key elements clarified above. At the same time the summary should be explanatory enough presenting the key elements that have been taken into account in developing the CCP's resolution plan. The key elements in the summary should accurately reflect the relevant elements of the resolution plan for the CCP based on its risk and organisational profile, including in view of the products cleared, business model and memberships.

10 The summary should take into account the specificities of the CCP, the complexity of the resolution plan and the level of detail of information considered necessary to be shared to achieve the aim of the summary to inform the CCP of the key elements of the plan that are relevant to the CCP. 23. There was a general agreement on the proposed Guideline 1 by the respondents. In particular, two respondents noted that they welcomed the flexibility provided to the resolution authority to take into account the individual characteristics of the concerned CCP and the specificities of the individual situation of the CCP. 24. Moreover, all respondents supported the establishment of a harmonised template of summary of the key elements of the resolution plan. Two respondents noted that they welcome the flexibility provided to the resolution authority to report only the relevant and essential information set out in the plan for the concerned CCP. Two respondents also noted that a harmonised template will only become an effective standard tool if all stakeholders understand and are familiar with this template. 25. Finally, all respondents agreed with how the principle of proportionality has been considered for the purpose of the summary of the resolution plans. 3.1.2 ESMA feedback statement to Guideline 1 26. ESMA has considered the comments received and takes note of the general agreement on the content of proposed Guideline 1. ESMA further notes that as the template is part of the Guidelines, and pursuant to Article 16(3) of ESMA Regulation, competent authorities must inform ESMA of whether they (i) comply, (ii) do not comply but intend to comply, or (iii) do not comply and do not intend to comply with these Guidelines, including their reasons for non-compliance, hence a general use and compliance is expected. 3.2 Guideline 2: Default and non-default events scenarios 27. Pursuant to point (a) of paragraph 7 of Article 12 of CCPRRR, the summary of the resolution plan shall contain a distinction between default events, non-default events and a combination of the two, in order to classify them according to the definition in Article 2(8) and (9) of CCPRRR. 28. For this purpose and to ensure transparency towards the CCP, ESMA proposed that the summary contain the key aspects of the scenarios, categorising them depending on whether they are derived from default or non-default events or a combination of both. 29. The template summary contains a new column for each scenario that is to be completed with the key aspects of each of the scenarios as they have been adopted to fit the concerned CCP.

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12 3.2.1 Responses received on proposed Guideline 2 under the consultation paper Guideline 2 When drafting the summary of the resolution plan, the resolution authority should use the template contained in Annex A Part 1. The resolution authority should, where relevant, fill out the column for each scenario in the template summary included in Annex A with the key elements of each of the scenarios including the details of how the scenarios have been tailored to the CCP. For this purpose, the resolution authority may consider the CCP’s business structure, its risk, its complexity, the clearing services it provides, its clearing members (and their clients) and its overall ownership and group organisation. It should indicate for each scenario whether it is derived from a default event, from a non-default event or from a combination of both. 30. All respondents agreed that key aspects of the default and non-default scenarios should be included in the summary of the resolution plan. 31. Two respondents noted that they welcome the flexibility for the resolution authority to include only relevant scenarios applicable to the specific circumstances. 32. One respondent suggested that non-default event scenarios be distinguished among (i) non – default events that are the sole responsibility of the CCP; and (ii) non-default events whose responsibility is to be shared among different stakeholders and that occurred despite the CCP complying with all the rules. According to this respondent, Recital 20 of the CCPRRR foresees that all stakeholders involved should bear the losses caused by a non-default event if they are responsible for them unless other arrangements are indicated in the CCP rulebook. Loss allocation for non-default losses should be proportional to the level of responsibility and/or benefits extracted from a service of each stakeholder. 3.2.2 ESMA feedback statement 33. ESMA takes note of the general agreement of the respondents with respect to the inclusion of key aspects of default and non-default scenarios in the summary of the resolution plan. 34. Moreover, ESMA has considered the suggestion regarding a division of responsibilities between the CCP and the relevant stakeholders in the context of non-default event scenarios. ESMA is of the view that the summary should reflect the resolution plan, and where the plan has established scenarios distinguishing among (i) non–default events that are the sole responsibility of the CCP; and (ii) non-default events whose responsibility is to be shared among different stakeholders, then the summary would reflect this division as well. ESMA would like to recall that the aim of these Guidelines is to provide guidance on and to establish a common framework for the presentation of the summary of the resolution plan. The Guidelines are not legally binding and cannot set requirements for such a division

13 under the non-default events to be established or include any provision relating to the substantial contents of such resolution plan as this is regulated under CCPRRR. Furthermore, ESMA notes that a similar comment was made by a respondent and addressed by ESMA in the context of the consultation on the draft regulatory technical standards on the content of CCP resolution plans and refer to the Final Report for further insight. 7 3.3 Guideline 3: Content of the summary – Key elements 35. Article 12(7) of CCPRRR sets the list of elements that shall be reflected in the resolution plan. When drafting the summary of the key elements of the resolution plan as required by Article 12(7) (a) of CCPRRR, ESMA proposed to clarify in Guideline 3 the key elements that should be considered for the summary of the resolution plan, quantified whenever appropriate and possible. 3.3.1 Responses received on proposed Guideline 3 under consultation paper Guideline 3 When drafting the summary of the resolution plan, the resolution authority should use the template included in in the Annex A, Part 2 of these Guidelines and fill out the information on the “Key elements of the summary of the resolution plan”. 36. Two respondents agreed with Guideline 3 on the key aspects that should be included in the summary of the resolution plan. One respondent did not comment. 3.3.2 ESMA feedback statement 37. ESMA takes note of the general agreement on the content of proposed Guideline 3 and keeps the proposal unchanged. 7 Draft Regulatory Technical Standards on the content of CCP resolution plans (Article 12(9) of the CCPRRR). Final report available at https://www.esma.europa.eu/document/final-report-draft-rts-content-resolution-plans (p.47).

14 4. Annexes 4.1 Annex 1 – Legislative provisions Article 12(7) CCPRRR 7. The resolution plan shall specify the circumstances and different scenarios for applying the resolution tools and exercising the resolution powers. It shall clearly distinguish, in particular through different scenarios, between failure caused by default events, non-default events, and a combination of both, as well as between different types of non-default events. The resolution plan shall include the following, quantified whenever appropriate and possible: (a) a summary of the key elements of the plan, distinguishing between default events, non-default events and a combination of the two; Article 12(8) CCPRRR 8. The information referred to in point (a) of paragraph 7 shall be disclosed to the CCP concerned. The CCP may express its opinion in writing on the resolution plan to the resolution authority. That opinion shall be included in the plan.

15 4.2 Annex 2 – Cost and benefit analysis

1. Introduction In accordance with Article 12(8) of CCPRRR the summary, referred to in point (a) of paragraph 7 of Article 12 of CCPRRR, shall be disclosed to the CCP and the summary shall contain the key elements of the resolution plan. The objective of these Guidelines, in accordance with Article 16 of ESMA Regulation is to establish consistent, efficient and effective supervisory practices within the ESFS, and to ensure the common, uniform and consistent application of Union law, by providing guidance to resolution authorities in the process of drawing up the summary of the resolution plan. To this end, Article 16 of the ESMA Regulation requires ESMA, where appropriate, to analyse the potential costs and benefits relating to proposed guidelines. It also states that cost-benefit analyses must be proportionate in relation to the scope, nature and impact of the proposed guidelines. The objective of performing a cost-benefit analysis is to assess the costs and benefits of the various policy or technical options which were analysed during the process of drafting the guidelines.
2. Cost-benefit analysis Below are detailed the different policy options considered on how to promote convergence of supervisory and resolution practices regarding the summary of resolution plan that is to be disclosed to the CCP, according to Article 12(8) of CCPRRR. Specific objective The resolution authority should ensure that transparency towards the CCP is respected and that a summary of the resolution plan is disclosed to that CCP, as required by Article 12(8). The Guidelines shall promote convergence of supervisory and resolution practices regarding the summary of the resolution plan that must be disclosed to the CCP. Policy option 1 To provide guidance through principles and guidance as to the relevant content of the summary and by including templates of the summary of key elements of the resolution plan. How would this option achieve the objective? This option would meet the objective as it would promote convergence of supervisory and resolution practices regarding the transparency towards the CCP. It would indeed create a good level of convergence as the content and the format of the summary would be similar between resolution authorities, avoiding therefore different approaches in the European Union. Option 1 also adheres to the principle of proportionality by providing the resolution authority the means to decide on the overall level of details in the

16 summary driven by relevance and usefulness to the overall resolution process, having regard to the specificities of the concerned CCP. Policy option 2 To provide guidance on a list of principles and objective elements the relevant authority should consider in determining the content and the format of the summary of the resolution plan with the aim to promote the convergence of supervisory and resolution practices. How would this option achieve the objective? This option would meet the requirements of ESMA’s objective of ensuring the consistent application of resolution practices, however, it would most likely create a lower level of convergence since resolution authorities would have greater decision-making discretion when assessing the elements to be included in the content of the summary and the format of it, which could lead to a divergence of approaches applied by the different resolution authorities. Policy option 3 To establish a detailed description of the elements and specificities that the resolution authority should reflect in the summary of the resolution plan, with the aim of promoting a high level of convergence of supervisory and resolution practices. This option could meet the requirements of ESMA’s objective of ensuring the consistent application of resolution practices. However, such a prescriptive and detailed list may not be considered as proportionate. This would require the resolution authority to implement and establish for each CCP a very detailed list, potentially providing information on less relevant or even irrelevant aspect for the CCP and probably with an unproportionate degree of details not justified by the CCP’s clearing services provided. Consequently, such a proposal could be seen as unnecessary burdensome on the resolution authority, with the potential risk of sharing too detailed information with the CCP, not taking its specificity into account and as a result not adjusted to the concerned CCP. As a result, this could lead to possibly less relevant summary of key elements of resolution plans for the CCP, which could affect the CCP preparations and awareness on resolution planning and its preparedness for resolution. Which policy option is the preferred one? Option 1, given that Option 2 could be seen as too vague and may fall short of the aim in ensuring convergence in the assessments of the resolution plan and given that Option 3 would risk to be too

17 burdensome and could fall short of the overall aim to ensure relevant information is shared with the CCP. Is the policy chosen within the sole responsibility of ESMA? If not, what other body is concerned / needs to be informed or consulted? ESMA is responsible for issuing the Guidelines and has consulted ESRB in the development of the Guidelines as the Guidelines are very closely linked to the draft Regulatory Technical Standards developed by ESMA in accordance with Article 12 (9) of CCPRRR8 . Impacts of the proposed policies: Policy option 1 Benefits It will provide clear guidance on the specific content and format of the resolution plan’s summary. Regulator’s costs Reasonably low costs are envisaged since the resolution authority would already have the elements that make up the content and format of the summary, avoiding further research and monitoring related costs. Compliance costs No compliance costs envisaged for the CCP. Policy option 2 Benefits Option 2 would give the resolution authority sufficient flexibility to set the content and format of the summary in its own way. Regulator’s costs Moderate costs for establishing the summary of the resolution plan as well as research and discussion on its content and format. Compliance costs No compliance costs envisaged for the CCP. Policy Option 3 Benefits Option 3 would create expectations upon the resolution authority to implement the framework as designed by the Guidelines. 8 Draft RTS on the content of CCP resolution plans (Article 12(9) of the CCPRRR. Final report available at https://www.esma.europa.eu/document/final-report-draft-rts-content-resolution-plans.

18 Regulator’s costs Medium costs are envisaged since the resolution authority would already have the elements that make up the content and format of the summary, however, due to the detailed approach additional costs could emerge in the implementation of the Guidelines. Compliance costs No compliance costs envisaged for the CCP. Conclusion The costs will in any case be reasonably moderate or even low, while the benefits of establishing guidance to support resolution authorities in building up the resolution plan summary in a similar way will result in a convergent application of EU law. On the basis of the analysis above, ESMA concludes that the benefits of issuing these Guidelines outweigh the costs. Proportionality-related aspects In assessing the overall proportionality of the proposal, ESMA notes that the Guidelines are proportionate as they are not too prescriptive, ensuring a sufficient degree of flexibility and not unduly burdensome on the resolution authorities. The obligation to establish the summary is already set by Article 12(7)(a) of CCPRRR. Thus, these Guidelines would in addition ensure clarity and consistent application in relation to the transparency towards the CCPs and increase their visibility on what to expect to receive in the summary reflecting the key elements under the summary and the overall guiding principles for establishing the summary. ESMA therefore understands that these Guidelines establishing the principles for the implementation of a summary of the resolution plan to be provided to CCPs comply with the principle of proportionality. Indeed, the Guidelines allow resolution authorities to adapt to the conditions and organisation of each particular CCP. Therefore, these Guidelines include the necessary tools and guidance to build an appropriate summary of the resolution plan, while at the same time ensuring that resolution authorities have sufficient degree of flexibility so that each summary can be tailored to the specific CCP in a proportionate manner. 4.2.1 Responses received on cost and benefit analysis Two respondents agree that a principle – based approach is the best option. One respondent did not comment. None of the respondents advocated for a different approach.

19 4.2.2 ESMA feedback statement ESMA takes note of the general agreement on the content of the cost and benefit assessment.

20 4.3 Annex 3 – Advice of the Securities and Markets Stakeholder Group In accordance with Article 16 of ESMA Regulation, ESMA has requested the advice of the Securities and Markets Stakeholder Group (SMSG). The SMSG has not provided any comment. 4.4 Annex 4 –Guidelines

21 Guidelines On the summary of resolution plans

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1. Scope Who?
2. These Guidelines apply to resolution authorities of CCPs as defined in point (3) of Article 2 of Regulation (EU) 2021/23. What?
3. These Guidelines apply in relation to Article 12(8) of CCPPRR, in relation to the information referred to in point (a) of paragraph 7 of Article 12 CCPRRR which shall be disclosed to the CCP and in relation to the Commission Delegated Regulation (EU) No 2023/1193. When?
4. These Guidelines apply from two months after the date of publication on ESMA’s website in the relevant official languages of the European Union.

23 2. Legislative references, abbreviations and definitions 2.1 Legislative references CCPRRR Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/11329 . ESMA Regulation Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC10 EMIR Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories Text with EEA relevance11 2.2 Abbreviations CCP Central Counterparty CP Consultation Paper 9 OJ L 22, 22.1.2021, p. 1 10 OJ L 331, 15.12.2010, p. 84. 11 OJ L 201, 27.7.2012, p. 1–59

24 EC European Commission EEA ESFS European Economic Area European System of Financial Supervision ESMA European Securities and Markets Authority EU European Union 2.3 Definitions 4. Unless otherwise specified, the terms used in these Guidelines have the same meaning as in CCPRRR and EMIR. 3. Purpose 5. Given the need to provide guidance on the summary of the resolution plan to be disclosed to CCPs subject to resolution planning under Article 12(8) of CCPRRR, ESMA has decided to issue Guidelines under Article 16(1) of ESMA Regulation, pursuant to which ESMA may issue guidelines with a view to establishing consistent, efficient and effective supervisory practices within the ESFS and to ensuring the common, uniform and consistent application of EU law, in this case Article 12(7), point (a) and Article 12(8) of CCPRRR and Delegated Regulation 2023/1193 on the content of the resolution plans. 6. In particular, the aim of those Guidelines is to provide clarity on the key elements of the resolution plan that should be included in the summary referred to in Article 12(7), point (a), of CCPRRR and disclosed to the CCP in accordance with Article 12(8) of CCPRRR. ESMA has therefore established a template for this summary in Annex A to these Guidelines. This template is to be used by the resolution authorities in drafting the summary of the resolution plans under Article 12(7), point (a) of CCPRRR. 7. Clarifying the aspects that the resolution authorities should consider in identifying the key elements of the summary of the resolution plan to be disclosed to the CCP, will help resolution authorities to draft the summaries of resolution plans in a common and harmonised manner. 8. The Guidelines allow resolution authorities to adapt the summary to the conditions and organisation of each particular CCP. The Guidelines present a list that the resolution authority should at least consider in establishing the summary of the resolution plan. The list under the Guidelines is not an exhaustive list, hence the resolution authority may add aspects considered material and relevant for the CCP.

25 9. The Guidelines contain guidance on building an appropriate summary of the key elements of the resolution plan, while at the same time ensuring that resolution authorities have a sufficient degree of flexibility so that each summary can be tailored to each CCP in a proportionate manner bearing in mind the specificities of the concerned CCP. 4. Compliance and reporting obligations 4.1 Status of the Guidelines 10. In accordance with Article 16(3) of the ESMA Regulation, the resolution authorities must make every effort to comply with these Guidelines. 11. The resolution authorities to which these Guidelines apply, should comply by incorporating them into their national legal and/or supervisory and resolution frameworks as appropriate. 4.2 Reporting requirements 12. Within two months of the date of publication of the Guidelines on ESMA’s website in EU relevant official languages, resolution authorities to which these Guidelines apply must notify ESMA whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the Guidelines. 13. In case of non-compliance, resolution authorities must also notify ESMA within two months of the date of publication of the Guidelines on ESMA’s website in the relevant EU official languages of their reasons for not complying with the Guidelines. 14. A template for notifications is available on ESMA’s website. Once the template has been filled in, it shall be transmitted to ESMA.

26 5. Guidelines on the Summary of Resolution Plans 5.1.1 Guideline 1: General considerations of relevance and proportionality Guideline 1 The summary of the key elements of the plan referred to in Article 12(7)(a) of CCPRRR should be drafted respecting the following principles on relevance: a) The summary should inform the CCP of the key elements of the resolution plan and should provide the CCP with an overview of the plan, in particular with a view to share information in relation to the following: (i) the different resolution scenarios and strategies envisaged to be applied in a resolution, distinguishing between default events, non-default events and a combination of the two; (ii) what resolution actions are planned to be taken and how they may affect the CCP, (iii) where there are expectations that the CCP will cooperate to the resolution process and (iv) how the resolution measures may affect the continuity of the CCP’s functions. b) The summary should make the CCP aware of the key actions that the CCP should be ready to perform and of the data that the CCP should be ready to submit. c) The summary of the resolution plan should focus on the aspects of the plan that are likely to have a material impact on the CCP’s recovery and crisis management planning. d) The summary should be succinct with a focus on the key elements set out above. At the same time the summary should be explanatory enough presenting the key elements that have been taken into account in developing the CCP's resolution plan. e) The key elements in the summary should accurately reflect the relevant elements of the resolution plan for the CCP based on its risk and organisational profile, including in view of the products cleared, business model and memberships. f) The summary should take into account the specificities of the CCP, the complexity of the resolution plan and the level of detail of information considered necessary to be shared to achieve the aim of the summary to inform the CCP of the key elements of the plan that are relevant to the CCP.

27 5.1.2 Guideline 2: Default and non-default events scenarios Guideline 2 When drafting the summary of the resolution plan, the resolution authority should use the template included in Annex A Part 1 of these Guidelines. The resolution authority should, where relevant, fill out the column for each scenario in the template summary included in Annex A with the key elements of each of the scenarios including the details of how the scenarios have been tailored to the CCP. For this purpose, the resolution authority may consider the CCP’s business structure, its risk, its complexity, the clearing services it provides, its clearing members (and their clients) and its overall ownership and group organisation. It should indicate for each scenario whether it is derived from a default event, from a non-default event or from a combination of both. 5.1.3 Guideline 3: Content of the summary – key elements Guideline 3 When drafting the summary of resolution plans the resolution authority should use the template included contained in Annex A, Part 2 of these Guidelines and fill out the information on the “Key elements of the summary of the resolution plan”. 5.1.4 Annex A – To the Guidelines: Template of Summary of the Resolution Plan 5.1.4.1 Part 1 – Key elements of the scenarios established by the resolution authority The Annex below should be completed by the resolution authority consistent with Guidelines 1 to 2. Where a type of scenario is not used the resolution authority should mark the table with “N/A”. The assessment that such a scenario is not to be used for the concerned CCP is a decision taken following the procedure set out in Article 14 of CCPRRR. Types of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR Factors to describe type of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR A description of the key elements of the scenarios established by the resolution authority. (to be completed by the resolution authority) Default Scenario – Unsuccessful recovery where the CCP does not have sufficient resources Establish scenario where a CCP has not fully addressed liquidity shortfalls or established loss allocation arrangements that fully address uncovered credit losses. As a result, recovery resources and tools

28 Types of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR Factors to describe type of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR A description of the key elements of the scenarios established by the resolution authority. (to be completed by the resolution authority) and tools for a successful recovery are insufficient to absorb losses and replenish financial resources to minimum regulatory requirements. Default Scenario - Failure of loss allocation arrangements Establish scenario where the CCP’s loss allocation arrangements set out in the recovery plan do not operate as intended and as a result, the planned resources or tools are not, or not sufficiently, available at the time of recovery. Default Scenario - Multiple clearing members do not meet their obligations under the CCP’s recovery actions Establish scenario where the multiple clearing members do not meet their obligations under the CCP’s recovery actions. If the group of non-performing clearing members is sufficiently large or if their failure to meet obligations leads to a general loss of confidence in the CCP, the CCP may become unable to continue operations. Default Scenario – Timing of resolution actions Establish scenario where the relevant authorities determine that resolution should be initiated before some of the arrangements or tools under the CCP’s recovery plan are applied. In this scenario, the relevant authorities have determined that applying recovery arrangements or tools in the prevailing market conditions may threaten financial stability and/or the continuity of critical functions. Non-default Scenario - Investment loss Establish scenario where losses on investments of initial margin or default fund assets could arise for example if an investment counterparty fails. A CCP may need to bear such losses, if the loss allocation tools in the CCP’s rules do not cover them in another manner. Losses could also occur from the investment of a CCP’s own financial resources including SITG and SSITG. Investment losses could materialise suddenly. Non-default Scenario￾Failure of service providers Establish scenario where, as a result of a failure of a custodian, depository, a payment or settlement bank, a payment system, a securities settlement system or other entity providing similar services, the CCP could lose timely access to its assets, become unable to collect margins or become unable to transform non￾cash collateral or investments into cash. This could cause liquidity and/or solvency challenges to a CCP, depending on the nature or consequences of the failure and the time it takes to regain access to the assets. Non-Default Scenario￾Operational risk events Establish scenario where financial losses or liquidity challenges arise from a range of operational failures, such as human error, information technology failure, fraud, cyber incident, or non-performance of vendors or service providers. A CCP can incur operational losses directly (primary losses) or due to the legal actions taken by others affected by the event (secondary losses). Operational risk events can

29 Types of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR Factors to describe type of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR A description of the key elements of the scenarios established by the resolution authority. (to be completed by the resolution authority) happen suddenly, but certain losses, particularly secondary losses can take years to fully materialise. Non-Default Scenario - Financial losses (Comprehensive loss allocation arrangements for custody and investment losses the CCP incurs as a result of its clearing and settlement activity) Establish scenario where the CCP does not have sufficient financial resources or tools to cover non￾default losses (including losses deriving from legal risks, including legal, regulatory, enforcement or contractual penalties that could lead to significant losses or uncertainty for the CCP and that can take a long time to materialise). In this scenario, the non￾default losses would be larger than the CCP’s capital and contingent resources (e.g. insurance, parental guarantees). Alternatively, in a scenario where the CCP’s clearing members would also be required to bear losses, the aggregate resources available would be insufficient to cover the losses and/or to replenish capital back to the required minimum. Establish scenario where the CCP’s arrangements to cover (specific) non-default losses set out in the recovery plan cannot be used or do not operate as intended. As a result, the planned resources or tools are not, or not sufficiently, available at the time of recovery. Establish scenario where the CCP’s clearing members do not meet their obligations under the CCP’s recovery actions. In this scenario, clearing members do not meet the applicable loss allocation or replenishment obligations. Establish scenario where the CCP’s shareholders do not support the CCP’s recovery actions. In this scenario, the CCP’s parent company or other shareholders do not cover the CCP’s non-default losses that are not allocated elsewhere and/or are unwilling to recapitalise the CCP, irrespective of whether there is a contractual commitment, parental guarantee, or similar arrangement to provide financial resources or not. Establish scenario where the relevant authorities determine that resolution should be initiated before some of the recovery arrangements or tools are applied or the CCP is wound down. In this scenario, the CCP’s recovery and wind-down arrangements are consistent with the PFMI, but the relevant authorities have determined that applying them in the prevailing market conditions may threaten financial stability and/or the continuity of critical functions. Event(s) causing simultaneous default Establish scenario where there are specific entities that are material sources of both default and non-default

30 Types of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR Factors to describe type of scenarios (Article 12(3)(a) and 12(7)(j)) of CCPRRR A description of the key elements of the scenarios established by the resolution authority. (to be completed by the resolution authority) and non-default losses - This scenario addresses the situation in which there are concurrent default and non-default losses as a result of a single event or as a result of multiple events that occur in a reduced time span. losses, specific scenarios analyzing the effects of default events affecting these entities may be relevant. Consider where non-default losses would be borne by clearing members affecting the path of loss propagation and where there are material differences between different combinations of default and non￾default events with respect to the available tools, usage of tools, paths of losses or impact on stakeholders.

2 5.1.4.2 Part 2 – Key elements of the summary of the resolution plan The Annex below should be completed by the resolution authority consistent with Guidelines 1 and 3. CCPRRR Reference Aspect Description of the key elements Comments Keys elements of the summary (to be completed by the resolution authority) 12(7)(b) Summary of material changes Any material changes to the CCP. The focus of the summary on material changes should be a short description of the material changes in relation to the CCPs: markets in which it operates, core business lines, clearing services, interoperability arrangements or other interdependences including service providers, capital structure, prudential requirements (including the default fund methodologies, margin and liquidity risk management frameworks, investment policies, collateral policies and settlement), non-prudential requirements (including organisational requirements, business continuity, outsourcing, conduct of business rules), ownership, managers’ incentive structures, resolution scenarios and resolution strategies. 12(7)(c) Critical Functions A high-level description of the functions defined as critical by the resolution authority. The focus of the summary on critical functions should be to list the functions of the CCP that the resolution authority has deemed critical and the main dependencies identified including the key internal and external

3 A high-level description of the main dependencies between critical functions and critical interdependencies. arrangements and processes, such as operations, IT procedures, a list of key staff and main service providers that are necessary for the CCP to continue providing its critical functions or any other aspects that may be necessary to consider in view of a possible transfer, if that is part of the proposed resolution strategy, a description of how critical functions could be separated from non-critical functions in economic, operational and legal terms and a summary of how the CCP’s proposed approach to separating or not separating the CCP’s critical functions from its other functions may affect the resolvability assessment for the CCP. Where there are any material differences compared to list of critical functions provided in the recovery plan, the summary should describe the main reasons why the resolution authority has assessed the critical functions differently, the material effects of such different assessment and how this could affect the resolvability of the CCP. The summary may include a mapping of critical functions to identified legal entities and to the CCP’s core business lines. 12(7)(d) Timeframe for implementation A high-level description of the key steps with estimated time allocations to implement According to the principle of relevance, the CCP may not receive any information on the timeframe for implementation. If it does, the focus of the summary on the timeframe for

4 the key material aspects of the resolution plan. implementation should be to give the CCP a general understanding of the timeframe. 12(7)(e) Assessment of resolvability A description on whether the CCP is deemed to be resolvable. The focus of the summary on the assessment of resolvability should be to provide the conclusion of the assessment of the CCPs resolvability, including at least, whether or not the CCP is deemed resolvable based on the resolution authorities’ considerations. 12(7)(f) Impediments to resolvability Information on any impediments to resolvability where such have been identified and shared with the CCP in a report in accordance with Article 16(1) of CCPRRR. The focus of the summary on impediments to resolvability should refer to the report issued to give an indication to what extent impediments have been identified and where possible, provide some further details on how the process is undertaken to remove such impediments. 12(7)(g) Determination of the value and marketability of the critical functions and assets A high-level description of the determined value and the marketability of the critical functions and assets of the CCP. The focus of the summary on determining the value and marketability of the critical functions and assets should be to provide the CCP with the main elements underpinning the determinations of the value and marketability of the CCP’s critical functions. Where the method applied by the resolution authority to assess those elements materially deviates from the valuation methodology applied under the recovery plan applicable, the summary should include a description of the main reasons for this difference and of its material effects, if any.

5 12(7)(h) Information requirements A description of the relevant information. The focus of the summary on information requirements should be to inform the CCP of the information required, under Article 13 of CCPRRR, to be kept up to date and available at all times. . 12(7)(i) How resolution actions could be financed A high-level description of the relevant resolution action’s types of financing. The focus of the summary on how resolution actions are financed should be to provide the CCP, where relevant, with an overview of the potential sources of resolution funding . 12(7)(j) Resolution strategies and scenarios A high-level description of the resolution scenarios chosen, as well as a brief description of the strategies chosen. The focus of the summary on the resolution scenarios and strategies should be to provide the CCP with an overview of the resolution scenarios and strategies chosen, and if several strategies are chosen how their application differs, and the main aspects of the strategic analysis that underpins the choices of the resolution scenarios and strategies. 12(7)(k) Critical external interdependencies A high-level description of the critical external interdependencies of the CCP. The focus of the summary on the critical external interdependencies should be to provide the CCP with an overview of what the critical external interdependencies are in order to ensure the continuity of the CCP’s critical functions. Where the interdependencies identified by the resolution authority differ materially from those identified in the recovery plan, the summary should state the main reasons for which the resolution authority has assessed the critical interdependencies differently and any material consequence on the application of the resolution plan and on

6 the CCP’s resolvability of the different assessments. Outsourcing arrangements to critical service providers should be included in that section to the extent that they cover part of the CCP’s core business. 12(7)(l) Critical intra-group interdependencies A high-level description of the critical intra-group interdependencies of the CCP. The focus of the summary on the critical intra￾group interdependencies should be to provide the CCP with an overview of the interdependencies identified in order to ensure the continuity of the CCP’s critical functions. Where the interdependencies identified by the resolution authority differ materially from those identified in the recovery plan, the summary should state the main reasons for which the resolution authority has assessed the critical interdependencies differently and any material consequence on the application of the resolution plan and on the CCP’s resolvability of the different assessments. 12(7)(m) Ensure certain functions of the CCP A high-level description of the different options to ensure the continuation of the essential operational processes and systems and the maintenance of contractual agreements (external and internal). The focus of the summary of certain functions of the CCP should be to provide the CCP with a description of the essential operational processes and systems, a description of how to assess and maintain those, with identified options of continued access to infrastructures, processes and operational arrangements in order to maintain the continuous functioning of the CCP’s essential operations and systems. and the key outcomes of the assessment.

7 The summary should also contain a high-level description on how to ensure contractual agreements are maintained (external and internal), including contractual resilience clauses, resolution-proof clauses, limitations of termination rights in resolution and for internal agreements, arms’ length contract terms and pricing structures. 12(7)(n) How to obtain the necessary information to perform the valuation A high-level description of the type of information that will be requested to perform a valuation. The focus of the summary on information for valuation should be to provide a description on the information needed to perform the valuation and should provide the CCP with an overview of the type (and the level of detail) of the information that could be requested by the resolution authority in order to take actions under the resolution plan and to ensure a fair, prudent and realistic valuation referred to in Article 24 of CCPRRR. 12(7)(o) Impact assessment on employees A high-level description on the employees of the CCP and how to retain key staff. The focus of the summary on the impact assessment on employees should be to provide an overview of the different types of employees of the CCP and especially how it is envisaged to retain key staff during the resolution phase as well as a description of the plan for communication with employees. 12(7)(p) Communication plan A high-level description of the communication plan specifying who informs the media and the public, when they are informed The focus of the summary on the communication plan should be to provide the CCP with a description of how the communication plan is envisaged to be implemented and specifying (to the extent

8 and what is planned to be communicated. possible) who informs the media and the public, when they are informed and what is planned to be communicated. 12(7)(q) Essential operations and systems A high-level description of the essential operations and systems identified under the resolution plan. The focus of the summary on essential operations and systems should be to provide the CCP with a description of the essential operations and systems identified under the resolution plan. Where the essential operations and systems identified by the resolution authority differ materially from those identified in the recovery plan, the summary should state the main reasons for which the resolution authority has assessed the essential operations and systems differently and any material consequence on the application of the resolution plan and on the CCP’s resolvability of the different assessments. 12(7)(r) Notification arrangements to the resolution college A high-level description of the arrangements for notifying the resolution college According to the principle of relevance, the CCP may not receive any information on the notification arrangements to the college. If it does, the summary should provide the CCP with a description of the procedures and processes to follow when notifying the resolution college. 12(7)(s) Measures to facilitate portability of positions and related assets A high-level description on how the portability of positions and related assets of its clearing The focus of the summary on the measures to facilitate portability of positions and related assets should be to provide the CCP with a general overview of the process governing the

9 members and their clients to another CCP or a bridge CCP can be concretely achieved. portability of positions and related assets of its clearing members and their clients to another CCP or a bridge CCP and the measures implemented by the CCP that would facilitate the process.