On 13 July 2021, the European Securities and Markets Authority (ESMA) published a methodology for assessing whether a third country central counterparty (TC-CCP) or some of its clearing services are of such substantial systemic importance that the TC-CCP should not be recognised to provide certain clearing services or activities in the European Union.

The methodology for ESMA’s assessment has been developed based on the requirements of Article 25 (2c) of the European Markets Infrastructure Regulation (EMIR) and includes:

  • An extended tiering methodology.
  • Reflections to identify how compliance with the conditions for TC-CCPs recognition would not sufficiently address EU financial stability risks.
  • A set of elements to take into consideration in the analysis of costs, benefits, and consequences, including a comprehensive analysis of risks related to both recognition and non-recognition.

In line with Article 25(2c) of EMIR, ESMA’s assessment of whether a CCP is of substantial systemic importance is to be commensurate with the degree of systemic importance of the CCP in accordance with Article 25(2a) of EMIR. Therefore, the ‘Methodology for tiering third country CCPs under EMIR 2.2’ is proposed as the starting point, to ensure consistency with the assessment of CCPs against the tiering criteria.