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Brussels, |
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Recovery and resolution of central counterparties (CCPs)
Central Clearing Counterparties (CCPs) are vital market infrastructures that act as intermediaries in financial transactions, managing counterparty risk and enhancing market transparency, especially in derivatives markets. Their role has grown significantly, making them crucial for financial stability.
Overview
CCPs clear various financial instruments and are essential for connecting banks, financial counterparties, and corporations. Their importance increased following the European Market Infrastructure Regulation (EMIR) No 648/2012, which was introduced to boost market transparency and reduce risks after the 2008 financial crisis. To further strengthen the supervision of both EU and non-EU CCPs, additional amendments were made in 2019.
Regulation on CCP Recovery and Resolution
To address the risks associated with the potential failure of a CCP, in 2021 the EU adopted the Regulation (EU) 2021/23 on CCP Recovery and Resolution. This regulation, which came into force on 11 February 2021, provides a robust framework for managing crises involving CCPs. It ensures that CCPs and national authorities in the EU have the necessary tools to preserve critical functions, maintain financial stability, and protect taxpayers in the event of a crisis.
The regulation also empowers the European Securities and Markets Authority (ESMA) to develop draft regulatory technical standards to supplement the framework, which are then submitted to the Commission for adoption.
Key Documents
Overview
CCPs clear various financial instruments and are essential for connecting banks, financial counterparties, and corporations. Their importance increased following the European Market Infrastructure Regulation (EMIR) No 648/2012, which was introduced to boost market transparency and reduce risks after the 2008 financial crisis. To further strengthen the supervision of both EU and non-EU CCPs, additional amendments were made in 2019.
Regulation on CCP Recovery and Resolution
To address the risks associated with the potential failure of a CCP, in 2021 the EU adopted the Regulation (EU) 2021/23 on CCP Recovery and Resolution. This regulation, which came into force on 11 February 2021, provides a robust framework for managing crises involving CCPs. It ensures that CCPs and national authorities in the EU have the necessary tools to preserve critical functions, maintain financial stability, and protect taxpayers in the event of a crisis.
The regulation also empowers the European Securities and Markets Authority (ESMA) to develop draft regulatory technical standards to supplement the framework, which are then submitted to the Commission for adoption.
Key Documents
- Factsheet: Safer financial infrastructure
- Impact Assessment of the Regulation
- Report on CCP Equity Treatment under the Regulation
