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ESMA Publishes Technical Advice for Third-Country CCPs

On November 11, the European Securities and Markets Authority (ESMA) published three sets of technical advice on tiering, comparable compliance and fees charged to third-country central counterparties (TC-CCPs). The advice is directed towards the European Commission (EC) and concerns the revised European Market Infrastructure Regulation (EMIR 2.2).

The EC will develop Delegated Acts for implementation of the technical advice, which are expected to be published in early 2020.

ESMA’s Technical Advice on Tiering

Under EMIR 2.2, TC-CCPs will be categorized based on whether they are systemically important (Tier 2) or not important (Tier 1). A firm would also be in Tier 2 if it was likely to become systemically important.

In this technical advice, ESMA set out the criteria it will use to determine if a firm is Tier 1 or Tier 2. These criteria include:

  • the nature, size and complexity of TC-CCPs business in the European Union (EU);
  • the risk profile of the TC-CCP;
  • the structure of the business in the EU, such as the clearing membership structure and other relationships or interdependencies; and
  • the impact that failure of or disruption to the TC-CCP would have on financial markets and the broader financial system.

The technical advice is available here.

ESMA’s Technical Advice on Comparable Compliance

A Tier 2 TC-CCP will have to comply with both EMIR and its home country requirements. In this technical advice, ESMA explains that a Tier 2 TC-CCP can evidence that its compliance with their home country regime also satisfies the requirements under EMIR by submitting a “reasoned request” to ESMA, who will pass the request onto the ESMA third country CCP College to be assessed.

The technical advice is available here.

ESMA’s Technical Advice on Fees Charged to TC-CCPs

The final technical advice sets out the specific “recognition” (i.e. application) fees and annual fees to be charged to TC-CCPs under EMIR 2.2. Like all ESMA fees, they will be calculated as a proportion of ESMA’s costs to supervise the firms. The fees will be different for Tier 1 and Tier 2, and there are specific provisions for 2019 and 2020 while EMIR 2.2 is implemented.

The technical advice is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume IX, Number 319


About this Author

John Ahern, Financial Attorney, London, Katten Law Firm

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

+44 (0) 20 7770 5253
Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...