Derivatives clearing houses in the EU
Produced in partnership with Assia Damianova of Cadwalader Wickersham & Taft
Derivatives clearing houses in the EU

The following Banking & Finance guidance note Produced in partnership with Assia Damianova of Cadwalader Wickersham & Taft provides comprehensive and up to date legal information covering:

  • Derivatives clearing houses in the EU
  • What is a clearing house?
  • Clearing participants
  • Client clearing
  • Clearing models
  • EMIR requirements for CCPs
  • EACH
  • Recovery and resolution—EU proposed rules on failure of clearing houses
  • Brexit

BREXIT: The UK is leaving the EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For guidance, see Practice Note: Brexit—impact on finance transactions—Key issues for derivatives transactions and Brexit—impact on finance transactions—Derivatives and debt capital markets transactions—key SIs.

What is a clearing house?

The clearing obligation under the European Markets Infrastructure Regulation (EU) No 648/2012 (EMIR) refers to a requirement that all eligible derivatives be cleared through a central counterparty (or simply, a clearing house), a 'CCP').

For more information on the clearing obligation, see Practice Notes: Clearing obligation and Clearing obligations: central clearing process and the role of clearing houses. EMIR has been subject to a review and the revised rules, known as EMIR REFIT (Regulation (EU) 2019/844) came into force on 17 June 2019.

A CCP is a market infrastructure designed to reduce and manage counterparty risk through clearing and settlement of transactions. Once a transaction has been agreed between two parties and registered with a CCP, the CCP inserts itself into the transaction to become the buyer to every seller and the seller to every buyer. The CCP nets transactions between members on a multilateral basis. This means that a payment due to the CCP from parties A and B can be netted off against