Financial Stability: Commission seeks feedback on draft EU rules on third-country central counterparties

The European Commission has today launched a public consultation on draft EU rules on the supervision of non-EU central counterparties (CCPs) that provide services to EU firms. The aim of this is to specify how EU rules on protecting financial stability will apply to these CCPs. CCPs play a systemic role in the financial system as they act as hubs for derivatives contracts. They are already well-regulated and subject to stringent supervision, thanks to a raft of measures adopted in the wake of the financial crisis. On 1 January 2020, new EU rules (referred to as the “European Market Infrastructure Regulation” or EMIR 2.2) became applicable, which upgraded how EU and non-EU CCPs are supervised. Today’s consultation consists of three draft delegated acts. They will improve the EU’s capacity to manage and address external risks to the financial system. These rules will also contribute to the resilience of financial market infrastructure, which is important to promote the international role of the euro and strengthen Europe’s economic and financial sovereignty. They specify how the European Securities and Markets Authority (ESMA) can supervise non-EU CCPs, depending on the degree of systemic risk that they pose to the EU’s financial system or to any of its Member States. Executive Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union said: “Protecting financial stability is one of our key priorities and CCPs play a systemic role in our financial system. We need to have predictable, proportionate and effective rules to address risks related to non-EU CCPs. This is in line with international efforts to bring stability and transparency to global derivative markets. We look forward to receiving public feedback.” The consultation will run for four weeks in accordance with the Better Regulation guidelines. The Commission will examine the feedback before proceeding with the adoption of the three delegated acts and transmitting them to the European Parliament and the Council for scrutiny. For more information, see here.