ESMA Seeks Consultation on CCP Recovery Regime

The European Securities and Markets Authority (ESMA) published seven consultation papers on Monday and is seeking stakeholder feedback on the implementation of central counterparty (CCP) recovery mandates.

CCPs are financial institutions that take on the counterparty credit risks between parties involved in transactions, providing clearing and settlement services for trades in foreign exchange, securities, options and derivative contracts. Thus, their services are crucial in the financial market.

Feedback on 7 Consultation Papers

The consultation papers include draft guidelines on the regulatory technical standards (RTS) of the methodology for calculation and maintenance of the additional amount of pre-funded dedicated resources. 

Additionally, the European regulator wants industry consultation on the guidelines on consistent application of the triggers for the use of early intervention measures and CCP recovery plan indicators and scenarios.

Commenting on the move, Klaus Löber, Chair of ESMA’s CCP Supervisory Committee, said: “The launch of ESMA’s public consultations, on the implementation of the CCP recovery mandates, is the first step to ensuring consistency of EU central counterparties recovery regimes at EU level in line with the highest international standards.”

“The proposed Regulatory Technical Standards and Guidelines complement the new EU Regulation on recovery and resolution, and will provide national and EU regulators with the necessary tools to support their supervisory and financial stability objectives while ensuring supervisory convergence across the EU.”

According to ESMA, the recommendations would support the development of CCP recovery plans. The agency will take the feedback on 20 September 2021.

Following the closure of Brexit at the end of last year, the European regulator allowed three United Kingdom-based CCPs to temporarily provide services in the 27-country bloc for 18 months.