Regulation of CCPs

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Regulation of CCPs
  • What are CCPs and what do they do?
  • Post-crisis reforms of the OTC derivatives markets including mandatory clearing
  • Scope of regulation of CCPs under EU EMIR and UK EMIR
  • Principal areas related to CCPs covered in EU EMIR and UK EMIR
  • Preventing CCP failure
  • Conflicts of interest
  • Business continuity
  • Clearing one derivative contract through two CCPs
  • Authorisation and supervision of CCPs
  • More...

Regulation of CCPs

CORONAVIRUS (COVID-19): This Practice Note contains information on subjects potentially impacted by the government and regulators' responses to the coronavirus (COVID-19) outbreak. We are reviewing our content on the basis of information available and will keep it under regular review. For information on key developments and related practical guidance on the implications for lawyers, see: Coronavirus (COVID-19) toolkit and Practice Note: Coronavirus (COVID-19)—implications for derivatives transactions—Implications for CCPs.

In each section of this Practice Note, links are given to the relevant provisions of EU and/or UK legislation, as applicable, and significant divergence between relevant EU and UK legislation is indicated.

What are CCPs and what do they do?

A central counterparty (CCP) is a type of financial institution (also known as a clearing house) which facilitates the clearing of both over-the-counter (OTC) derivatives and exchange-traded derivatives (ETDs).

A derivative is a type of financial instrument whose value is determined by reference to (and so derived from) an underlying asset, index, rate, reference point or risk (referred to as the underlying asset or underlying). Derivatives are bi-lateral contracts which involve the transfer of all or part of the risk and reward associated with the underlying from one party to another without the immediate transfer of the underlying itself.

The terms of OTC derivatives are agreed directly between the parties (or in some cases arranged through a broker). OTC derivatives

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