The move reflects the extension of the expiry date of the Implementing Decision (EU) 2018/2031 of the European Commission on the equivalence of the UK CCP legal framework.
The European Securities and Markets Authority (ESMA) today announces that it has extended the recognition decisions for the three central counterparties (CCPs) established in the United Kingdom (UK) to reflect the extension of the expiry date of the Implementing Decision (EU) 2018/2031 of the European Commission on the equivalence of the UK CCP legal framework.
ESMA announced in February this year that in the event of a no-deal Brexit, it would recognise the three UK CCPs – LCH Limited, ICE Clear Europe Limited and LME Clear Limited.
On October 29, 2019 the European Council took a decision in agreement with the UK to extend the period under Article 50(3) TEU. Also, on December 19, 2019 the European Commission adopted Implementing Decision (EU) 2019/2211 amending Implementing Decision (EU) 2018/2031. As a result, Implementing Decision (EU) 2018/2031 is now set to expire one year after the date referred to in the second paragraph of Article 2 of that Decision.
ESMA has consequently amended the recognition decisions for the three UK CCPs to extend them until this new expiry date.
Back in February 2019, ESMA explained that it had made the recognition decisions in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU.
ESMA had previously communicated that its Board of Supervisors supports continued access to UK CCPs. Having assessed the applications and the information submitted by the three CCPs, and consulted the relevant authorities in accordance with EMIR, ESMA considers that the conditions for recognition under Article 25 of EMIR are met by the three CCPs in case of a on a no-deal Brexit.
Therefore, it adopted decisions to recognise the three CCPs as third country CCPs under EMIR.
The recognition decisions would take effect on the date following Brexit date, under a no-deal Brexit scenario.