Regulatory Alerts2020-07-14
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Commission Delegated Regulation (EU) 2020/1303 supplementing Regulation (EU) No 648/2012 on criteria for ESMA to determine systemic importance of third-country central counterparties
The European Commission adopts delegated regulation specifying the criteria the European Securities and Markets Authority (ESMA) must assess to determine whether a third-country central counterparty (CCP) is systemically important for EU financial stability. The regulation mandates ESMA to evaluate five key areas: the nature and size of the CCP's business, the effect of its failure, its clearing membership structure, the availability of alternative clearing services, and its interdependencies with other financial infrastructures. ESMA is required to apply specific quantitative indicators, including thresholds of EUR 1,000 billion for open interest or notional outstanding amounts, EUR 25 billion for aggregated margin requirements, and EUR 3 billion for estimated largest payment obligations, to classify a third-country CCP as Tier 2. The regulation enters into force on the day following its publication in the Official Journal of the European Union.