EC Proposes Amendments to EMIR on Third-Country CCPs

The European Commission ("EC") published three draft delegated acts (see here, here and here) concerning supervision of third-country central counterparties ("TC-CCPs") by the European Securities and Markets Authority ("ESMA").

Specifically, the draft delegated acts would amend EMIR to address (i) "the minimum elements to be assessed by ESMA when assessing third-country CCPs' requests for comparable compliance," (ii) "the criteria that ESMA should take into account to determine whether a central counterparty established in a third-country is systemically important or likely to become systemically important," and (iii) "fees charged by ESMA to central counterparties established in third countries."

U.S. Support

CFTC Chair Heath P. Tarbert called the EC's drafts a "positive step" and praised the "collaborative spirit" by the EC for incorporating both (i) regulatory deference with regard to the supervisory oversight of U.S.-based TC-CCPs and (ii) improved information sharing among supervisory authorities. Congressmen David Scott (D-GA) and Austin Scott (R-GA), the chair and ranking member, respectively, of the House Agricultural Subcommittee on Commodity Exchanges, Energy, and Credit, also issued statements of support for the EC action.

Commentary

On the one hand, commenters to the EC had expressed concern as to permitting any laxity in the regulation of foreign entities deemed systemically significant. On the other hand, commenters worried that a heavy-handed approach to the regulation of non-EC entities would be counter-productive, including by virtue of discouraging non-EC CCPs from doing business in the EC.

While the EC regulators did not, in the case of CCPs previously deemed to be systemically significant, determine to accept non-EC regulation as inherently sufficient, the EC did propose to take a sufficiently light-handed approach to draw positive feedback from U.S. government officials and regulators.

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