On 11 June 2020, the European Commission published for consultation a Delegated Regulation supplementing the European Market Infrastructure Regulation (EMIR) with regard to the criteria that the European Securities and Markets Authority (ESMA) should take into account to determine whether a central counterparty (CCP) established in a third country is systemically important or likely to become systemically important for the financial stability of the EU or of one or more of its Member States.

Article 25(2a) of EMIR empowers the Commission to adopt a delegated act specifying further the criteria to be applied by ESMA when determining whether a third-country CCP is systemically important or likely to become systemically important for the financial stability of the EU or of one or more of its Member States. The delegated act is adopted in accordance with Article 82 of EMIR which stipulates that the Commission shall endeavour to consult ESMA before adopting such an act.

The layout of the draft delegated act is as follows:

  • Article 1 defines a core set of elements to be assessed by ESMA when taking into account the nature, size and complexity of the CCP’s business in accordance with Article 25(2a)(a). It also defines a set of additional elements to be assessed for CCPs crossing one or more of the quantitative indicators listed under Article 6.
  • Article 2 defines a core set of elements to be assessed by ESMA when taking into account the effect of failure of or a disruption to a CCP in accordance with Article 25(2a)(b). It also defines a set of additional elements to be assessed for CCPs crossing one or more of the quantitative indicators listed under Article 6.
  • Article 3 defines a core set of elements to be assessed by ESMA when taking into account the CCP’s clearing membership structure in accordance with Article 25(2a)(c). It also defines a set of additional elements to be assessed for CCPs crossing one or more of the quantitative indicators listed under Article 6.
  • Article 4 defines a core set of elements to be assessed by ESMA when taking into account alternative clearing services provided by other CCPs in accordance with Article 25(2a)(d). It also defines a set of additional elements to be assessed for CCPs crossing one or more of the quantitative indicators listed under Article 6.
  • Article 5 defines a core set of elements to be assessed by ESMA when taking into account the CCP’s relationship, interdependencies, or other interactions in accordance with Article 25(2a)(e). It also defines a set of additional elements to be assessed for CCPs crossing one or more of the quantitative indicators listed under Article 6.
  • Article 6 defines quantitative indicators allowing ESMA to estimate the exposure of clearing members and clients established in the EU to third-country CCPs.
  • Article 7 provides the date of the entry into force of the Act.

The deadline for comments on the draft delegated act is 9 July 2020.