The purpose of the Regulations are to ensure that the regulatory regime for central counterparties (CCPs) established by EMIR functions effectively after Brexit, following the implementation of EMIR into domestic UK law.
The Regulations are designed to:
- Transfer ESMA’s functions relating to the recognition of third country CCPs to the Bank of England. Equivalence decisions (currently taken by the European Commission relating to whether third countries have an equivalent regulatory regime) will be transferred to HM Treasury.
- Give the Bank of England powers to make decisions on the recognition of non-UK CCPs before exit day. From exit day, only non-UK CCPs which have been recognised by the BoE will be able to provide clearing services in the UK.
- Establish a temporary recognition regime which enables third country CCPs to continue their activities in the UK for a limited period after exit day provided they:
- Are currently able to provide those activities in the EU under EMIR; and
- Have notified the BoE before exit day of their intention.
- Enable the BoE to charge fees from non-UK CCPs that are providing services to the UK.
The draft Regulations contain amendments to Part 18 and Schedule 17A of the Financial Services and Markets Act 2000 (FSMA) and to the retained EMIR. The Regulations relating to temporary recognition and the charging of fees will come into force on the day after which the Regulations are made. The Regulations have been laid before Parliament and the intention is for the rest of the Regulations to come into force on exit day.