Central Counterparties
Central Counterparties (CCPs) interpose themselves between counterparties to contracts traded, becoming the buyer to every seller and the seller to every buyer.
The growing systemic importance of CCPs and their inter-linkages to the financial system as a whole underline the critical nature of CCPs established in the Union and in third-countries for the financial stability of the Union. A default or disruption at a CCP can have substantial destabilizing effects on linked clearing members, their clients or on other financial market infrastructures (FMIs) established in one or more Member States and impair critical markets for the proper conduct of monetary policy in Union currencies.
ESMA’s mission
The soundness and robustness of CCPs is therefore at the heart of ESMA’s mission to safeguarding financial stability in the Union and promoting stable and orderly financial markets.
ESMA conducts the following activities in relation to CCPs:
- the assessment of risks and resilience of CCPs and the clearing ecosystem;
- the promotion of supervisory convergence and consistency in supervisory outcomes among EU CCPs;
- the recognition of third-country CCPs (TC-CCPs);
- the monitoring of recognised TC-CCPs and the supervision of the most systemically relevant amongst them (Tier 2 CCPs); and
- the completion of the Single Rulebook for CCPs under EMIR and CCP Recovery and Resolution Regulation.
Institutional set-up
In order to fulfil the mission related to CCPs, EMIR has established the CCP Supervisory Committee as a permanent standing committee of ESMA, in addition to the CCP Policy Committee established by the Board of Supervisors. The CCP Recovery and Resolution Regulation has introduced another standing committee, the CCP Resolution Committee, focussing on CCP resolution issues.
The decisions of the standing committees are approved by the Board of Supervisors of ESMA and the relevant preparatory work is undertaken by dedicated staff in the CCP Directorate of ESMA, and supported by horizontal services at ESMA. All bodies contribute jointly to the fulfilment of ESMA’s mission relating to CCPs.
