EU Publishes Draft Delegated Regulation on Changes to CCP Colleges under EMIR 2.2

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Shearman & Sterling LLPThe European Commission has published a draft Delegated Regulation designed to amend existing Delegated Regulation (EU) No 876/2013, which supplements the European Market Infrastructure Regulation with regards to changes to the composition, functioning and management of colleges for central counterparties. Under EMIR, "colleges" are supervisory bodies made up of the regulators responsible for supervision of a given CCP. From January 2020, revisions to EMIR (known as "EMIR 2.2") took effect, which introduced changes to the procedures and authorities involved in the authorization of central counterparties and the requirements for the recognition of third-country CCPs. EMIR 2.2 required ESMA to develop draft Regulatory Technical Standards on: (i) which currencies were "most relevant" for the purposes of determining which central banks should be included in a CCP's college; and (ii) details of the practical arrangements for the functioning of the college that should be agreed in writing between the members of the college.

The amendments to the existing Delegated Regulation are limited in scope and relate only to competent authorities, imposing no additional obligations on market participants. Key elements of the amendments under the draft Delegated Regulation are:

  • Provisions governing the process by which both: (i) competent authorities of lesser clearing members; and (ii) central banks of EU currencies other than those deemed "most relevant", may apply to the CCP's competent authority for membership of a college, as well as the manner in which the CCP's competent authority must respond to those applications;
  • Provisions specifying that the European Central Bank has two votes in a college where it is a member;
  • Provisions governing the circulation and setting of the agenda of college meetings and minimum timeframes for the assessment of relevant documentation by college members;
  • The right for college members to request that a CCP's competent authority hold a meeting of the college, and an obligation upon the CCP's competent authority to provide reasons for any rejection of such a request; and
  • Provisions requiring that transmission of confidential information should be done using a secure method of communication and college members should always be informed on an equal basis.

View the draft Delegated Regulation.
 
View details of EMIR 2.2

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