FLASHCARD—EU recognition of UK CCPs

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • FLASHCARD—EU recognition of UK CCPs

FLASHCARD—EU recognition of UK CCPs

This FLASHCARD will help you absorb or recall the core points on the recognition of UK central counterparties (CCPs) under Regulation (EU) 648/2012 (EU EMIR).

How did Brexit affect the EU market for clearing services?

Pre-Brexit, three UK CCPs (London Clearing House (LCH), LME Clear and ICE Clear Europe) dominated the market for derivatives clearing services in the EU—it was estimated in June 2017 that UK CCPs cleared approximately 90% of the euro-denominated interest rate swaps of euro area counterparties, and 40% of their euro-denominated credit default swaps.

At the end of the implementation period (31 December 2020), the UK CCPs ceased to be subject to EU supervision and became third country CCPs for the purposes of EU EMIR. Article 25(1) of EU EMIR provides that a CCP established in a third country may not provide clearing services to clearing members or trading venues established in the EEA unless it has been recognised by ESMA.

The conditions for recognition include adoption by the European Commission of an implementing act determining that the legal and supervisory regime for CCPs in the relevant third country is equivalent to the rules in EU EMIR.

On 21 September 2020, the Commission adopted a time-limited equivalence determination in respect of the UK (Commission Implementing

Popular documents