EMIR introduces a harmonised set of organisational, business conduct and prudential requirements for clearing service providers. CCPs interpose themselves between counterparties to a derivative contract, becoming the buyer to every seller and the seller to every buyer. In doing so, CCPs become the focal point for derivative transactions thus increasing market transparency and reducing the risks inherent in derivatives markets.
Firms wanting to offer CCP services in the EU must seek authorisation under EMIR. National securities regulators are responsible for the authorisation of EU-based CCPs. CCPs based outside the EU who want to offer clearing services within the EU, need to be recognised by ESMA.
ESMA’s role in this respect is that of a standard-setter who further clarifies the CCP provisions under EMIR. In fulfilling this role, ESMA has issued:
Regulatory technical standards for CCPs
- General requirements
- Capital requirements
Implementing technical standards
- Records to be maintained by CCPs
Guidelines and recommendations
- CCP interoperability
- Written agreement for CCP colleges
CCP authorisation, recognition and supervision
For each EU-based CCP a college of supervisors will be established made up of relevant national regulators and ESMA. These colleges are responsible for authorising and supervising EU CCPs. ESMA also publishes the list of relevant national CCP regulators and of the CCPs have been authorised.
ESMA is charged with the recognition of third country (non-EU) CCPs.
A third country (non-EU) CCP needs to be recognised by ESMA to offer clearing services to EU customers, fulfilling certain requirements. ESMA has issued guidance for third country (non-EU) CCPs and also publishes the names of third country (non-EU CCPs) that have applied or which have already been recognised when applicable.
Prior to recognition the EC must adopt an implementing act determining, amongst other issues, that the legal and supervisory arrangements of the relevant third country (non-EU country) imposes legally binding requirements which are equivalent to those contained in Title IV of EMIR. For some jurisdictions ESMA has assessed whether third country (non-EU country) legislation meets the EMIR standard through ESMA technical advice to the EC on which to base its decision. Based on this advice the EC has started issuing implementing acts for some jurdisdictions.
Some cooperation arrangements must also be in place between ESMA and the relevant third country (non-EU) competent authorities whose legal and supervisory frameworks have been recognised as equivalent. Some of those arrangements named Memorandum of Understanding have been signed.
ESMA does not actively supervise third-country (non-EU) CCPs, but following recognition defers to the third-country (non-EU) CCP’s home supervisor to undertake the day-to-day supervision of that CCP.