On 24 February 2020, HM Treasury published the draft text of the Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020.

The purpose of the draft statutory instrument is to ensure that the requirements imposed by EMIR 2.2 continue to apply in the UK after the implementation period, and transfers new responsibilities from EU authorities to the appropriate UK authorities.

In particular, the draft statutory instrument:

  • transfers responsibility for tiering to the Bank of England (BoE), who will be able to tier third country central counterparties (CCPs) according to their systemic importance to the UK. This will be part of its existing responsibility for recognising third country CCPs;
  • transfers responsibility for Tier 2 CCPs to the BoE;
  • transfers the power to use the location policy from the European Commission to HM Treasury, following a recommendation from the BoE, and subject to appropriate procedural safeguards and transitional provisions;
  • transfers certain delegated acts to the BoE which will be made via binding technical standards; and
  • empowers the BoE to make recognition decisions ahead of the UK’s exit from the implementation period.

HM Treasury plans to lay the draft statutory instrument before Parliament in the Spring.

The BoE will update its rules and relevant binding technical standards to reflect the changes introduced through this draft statutory instrument. This will ensure that they will operate at the end of the transition period.