On 23 June 2020, the European Council issued a press release stating that its Presidency and the European Parliament had reached political agreement on a common set of rules for central counterparty (CCP) recovery and resolution.
The main objectives of the reforms are:
- To reduce the probability of CCP failure by introducing effective incentives for proper risk management.
- In case a financial difficulty would effectively arise, to preserve CCPs’ critical functions, to maintain financial stability, and to prevent taxpayers from bearing the costs associated with their restructuring or resolution.
Following finalisation of technical work, the draft legislative text will be submitted to EU ambassadors for endorsement with a view to reaching an agreement in the form of a (pre-negotiated) Council position at first reading. It will then undergo a legal linguistic revision. The European Parliament and Council will be invited to adopt the proposed regulation pursuant to Article 294(7) Treaty on the Functioning of the EU (often referred to as an ‘early second-reading agreement’).