On 26 June 2020, there was published on legislation.gov.uk The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc, and Transitional Provision) (EU Exit) Regulations 2020 (the SI) together with an explanatory memorandum and impact assessment.
Part 2 of the SI makes changes to primary legislation – the Financial Services and Markets Act 2000. These changes expand the UK’s existing central counterparty (CCP) supervisory framework to cover third county CCPs, in order to ensure that the Bank of England (BoE) is able to undertake the necessary supervisory responsibilities required under the EMIR 2.2 framework. In particular, the SI transfers the European Securities and Markets Authority’s (ESMA) new supervisory responsibility over Tier 2 CCPs to the BoE. To facilitate this, regulations 2 and 11 extend the existing supervisory framework and tools which the BoE uses to supervise UK CCPs to also apply to third country CCPs. This includes providing the BoE with powers to investigate and take supervisory action against Tier 2 CCPs, mirroring the powers ESMA currently has.
Part 3 of the SI ensures that the references to EMIR in UK legislation are up to date. It also makes changes to a number of EU Exit instruments which address deficiencies in EMIR arising as a result of exit, and some updates are necessary to ensure the deficiency fixes now operate effectively with the changes introduced to EMIR by EMIR 2.2.
Part 3 of the SI updates existing legislation in order to ensure the BoE can assess third country CCP applications in line with the new EMIR 2.2 provisions before the end of the transition period.
Part 4 of the SI addresses deficiencies in EMIR, as amended by EMIR 2.2, to ensure that the UK continues to have an effective regulatory framework for over-the-counter derivatives and CCPs after the end of the transition period.