Recovery and resolution of central counterparties (CCPs)

‘EU Legislation in Progress’ briefings aim to provide Members of the European Parliament with systematic and automatic analysis on all substantial proposals for EU legislation at every stage of the legislative procedure. Each contains an account of the purpose, content and legal aspects of the legislation proposed, in particular analysing what the legislation would change, as well as any previous legislation and the background. An overview of stakeholders’ views is also provided, as well as the opinions of national parliaments and the two advisory committees.

They are all made publicly available for stakeholders and the public.

The briefings are continuously updated as they pass through the policy making process and the source url hyperlink above should take you to the latest available version.In recent years, the role and systemic importance of central counterparties (CCPs) has expanded with the gradual implementation of the obligation to centrally clear liquid and standardised over-the-counter (OTC) derivatives. The relevant EU regulatory framework lays down prudential requirements for CCPs, as well as requirements regarding their operation, oversight and risk management. No harmonised EU rules, however, exist for the unlikely situations in which these standards prove insufficient to address major financial or operational difficulties that CCPs may incur or their outright failure. The international standard-setting organisations have developed standards for the recovery and resolution of financial market infrastructures, including CCPs.

In a 2013 own-initiative resolution, the European Parliament called on the European Commission to prioritise the recovery and resolution of CCPs and reiterated this request in a 2015 resolution on building a capital markets union.

In November 2016 the European Commission adopted a proposal for a regulation requiring CCPs to prepare recovery measures and providing resolution authorities with early intervention and resolution powers.

EP: EPRS: Briefing: EU Legislation in Progress http://epthinktank.eu/eu-legislation-in-progress/

ESO: Background information: Proposal for a Regulation of the European Parliament and of the Council on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, and (EU) 2015/2365 (COM (2016)856) http://www.europeansources.info/record/proposal-for-a-regulation-of-the-european-parliament-and-of-the-council-on-a-framework-for-the-recovery-and-resolution-of-central-counterparties-and-amending-regulations-eu-no-1095-2010-eu-no-648/

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