On 14 April 2023, the Bank of England (BoE) and the Commodity Futures Trading Commission (CFTC) announced a further strengthening of their commitment to close cooperation and mutual understandings on the supervision of cross-border central counterparties (CCPs)
Following the UK’s withdrawal from the European Union, the BoE has responsibility for recognising and supervising non-UK CCPs (incoming CCPs) intending to provide clearing services to clearing members or trading venues established in the UK, subject to HM Treasury making regulations determining that the home regime is equivalent to the UK’s regime. The Bank will tier incoming CCPs according to the level of systemic risk they pose to the UK financial system. Where the BoE determines that it is able to place reliance on the incoming CCP’s home authority’s regulation and supervision, the CCP will be designated as a Tier 1 and the BoE will defer to the home authority, upon issuance of the BoE’s recognition decisions.
In this regard, the CFTC and the BoE reaffirm the primacy of the UK and US home authorities in their respective jurisdictions and recognise the importance of deference, sustained by an appropriate and proportionate framework for information sharing and cooperation.
Based upon the Memorandum of Understanding and the detailed practices set out thereunder, the BoE has determined that its relationship with the CFTC meets the expectations of the BoE’s Level 1 Informed Reliance Assessment. Consistent with the Bank’s Statement of Policy and following the recognition and tiering decisions, the outcome of this assessment enables the BoE to place reliance on the CFTC’s supervision and oversight of incoming CCPs based in the US.