Financial Stability: EU rules on third-country central counterparties enter into force

On 1 January 2020, new EU rules under the ‘European Market Infrastructure Regulation' or EMIR 2.2 on the supervision of EU and non-EU central counterparties (CCPs) became applicable. CCPs play a systemic role in the financial system as they act as a buyer for every seller and a seller for every buyer of derivatives contracts. In order for the new rules to be given full effect, they needed to be complemented with three delegated acts.

The acts have been published today in the Official Journal of the European Union and will enter into force today (22 September). These new rules will improve the EU's capacity to manage and address external risks to the financial system. They 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 open strategic autonomy.

The delegated acts specify, among other things, 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. They set out criteria on how ESMA should tier third-country CCPs based on their systemic importance, and how ESMA should assess if CCPs' compliance with third country rules is comparable to EU rules.

An Economy that Works for People Executive Vice President Valdis Dombrovskis 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.”

For more information, see here and here. 

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