Regulation (EU) No 648/2012 of the European Parliament and of the CouncilShow full title

TITLE I U.K. SUBJECT MATTER, SCOPE AND DEFINITIONS

Article 1 U.K. Subject matter and scope

1. This Regulation lays down clearing and bilateral risk-management requirements for over-the-counter (‘OTC’) derivative contracts, reporting requirements for derivative contracts and uniform requirements for the performance of activities of central counterparties (‘CCPs’) and trade repositories.

2. This Regulation shall apply to CCPs and their clearing members, to financial counterparties and to trade repositories. It shall apply to non-financial counterparties and trading venues where so provided.

3. Title V of this Regulation shall apply only to transferable securities and money-market instruments, as defined in [F1 Articles 2(1)(24) and 2(1)(25A) of MIFIR].

4. This Regulation shall not apply to:

[F2 (a) the Bank of England and other public bodies in the United Kingdom charged with or intervening in the management of the public debt;]

(b) the Bank for International Settlements[F3 ;]

[F4 (c) the central banks and public bodies charged with or intervening in the management of the public debt in the following countries:

(i)

Japan;

(ii)

United States of America [F5 ;]

(iii)

[F6 Australia;

(iv)

Canada;

(v)

Hong Kong;

(vi)

Mexico;

(vii)

Singapore;

(viii)

Switzerland.]]

5. With the exception of the reporting obligation under Article 9, this Regulation shall not apply to the following entities:

(a) multilateral development banks, as listed under [F7 Article 117 of the Capital Requirements Regulation];

(b) public sector entities within the meaning of [F8 Article 4(1)(8) of the Capital Requirements Regulation] where they are owned by central governments and have explicit guarantee arrangements provided by central governments;

(c) the European Financial Stability Facility and the European Stability Mechanism.

[F9 6. The Treasury may by regulations amend the list set out in paragraph 4 of this Article.]

Textual Amendments

F1 Words in Art. 1(3) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 10(2) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F2 Art. 1(4)(a) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 10(3) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F3 Substituted by Commission Delegated Regulation (EU) No 1002/2013 of 12 July 2013 amending Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to the list of exempted entities (Text with EEA relevance).

F4 Inserted by Commission Delegated Regulation (EU) No 1002/2013 of 12 July 2013 amending Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to the list of exempted entities (Text with EEA relevance).

F5 Substituted by Commission Delegated Regulation (EU) 2017/979 of 2 March 2017 amending Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to the list of exempted entities (Text with EEA relevance).

F6 Inserted by Commission Delegated Regulation (EU) 2017/979 of 2 March 2017 amending Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to the list of exempted entities (Text with EEA relevance).

F7 Words in Art. 1(5)(a) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 10(4)(a) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in Art. 1(5)(b) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 10(4)(b) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F9 Art. 1(6) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 10(5) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

Article 2 U.K. Definitions

For the purposes of this Regulation, the following definitions shall apply:

(A1)

[F10 “FSMA” means the Financial Services and Markets Act 2000;

(A2)

“MIFIR” means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) 648/2012;

(A3)

“Capital Requirements Regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) 648/2012;

(A4)

“2013 Regulations” means the Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013;

(A5)

“Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

(A6)

“PRA-authorised person” has the meaning given in section 2B(5) of the FSMA;]

(1)

[F11 “CCP” means a body corporate or unincorporated association which interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer;]

(2)

‘trade repository’ means a legal person that centrally collects and maintains the records of derivatives;

(3)

‘clearing’ means the process of establishing positions, including the calculation of net obligations, and ensuring that financial instruments, cash, or both, are available to secure the exposures arising from those positions;

(4)

[F12 “trading venue” means a UK trading venue within the definition in Article 2(1)(16A) of the MIFIR;]

(5)

[F13 “derivative” or “derivative contract” means a financial instrument referred to in paragraphs 4 to 10 of Part 1 of Schedule 2 to the Regulated Activities Order;]

(6)

‘class of derivatives’ means a subset of derivatives sharing common and essential characteristics including at least the relationship with the underlying asset, the type of underlying asset, and currency of notional amount. Derivatives belonging to the same class may have different maturities;

(7)

[F14 ‘ OTC derivative ’ or ‘ OTC derivative contract ’ means a derivative contract the execution of which does not take place on a [F15 UK regulated market within the meaning given in Article 2(1)(13A) of the MIFIR] or on a third-country market considered to be equivalent to a [F16 a UK regulated market in accordance with an implementing act adopted by the Commission under Article 2a of this Regulation before IP completion day or in accordance with regulations made by the Treasury under that Article after IP completion day];]

(8)

[F17 “financial counterparty” means:

(a)

an investment firm within the meaning given in Article 2(1A) of the MIFIR which:

(i)

has its registered office or head office in the United Kingdom;

(ii)

has permission under Part 4A of the FSMA to carry on regulated activities relating to investment services and activities (as defined in Article 2(1)(2) of the MIFIR) in the United Kingdom;

(iii)

would require an authorisation given under Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and 2011/61/EU (as it had effect immediately before IP completion day) if it had its registered office (or if it does not have a registered office, its head office) in an EEA state; and

(iv)

is not a firm which has permission under Part 4A of the FSMA to carry on regulated activities as an exempt investment firm, within the meaning given in regulation 8 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017;

(b)

a credit institution which is a CRR firm (within the meaning given in Article 4(1)(2A) of the Capital Requirements Regulation);

(c)

an insurance undertaking or a reinsurance undertaking within the meaning given in section 417 of the FSMA;

(d)

a UK UCITS (within the meaning given in section 237(3) of the FSMA) and, where relevant, its management company (within the meaning given in section 237(2) of the FSMA) unless that UCITS is set up exclusively for the purposes of serving one or more employee share purchase plans;

(e)

an occupational pension scheme within the meaning given in section 1(1) of the Pension Schemes Act 1993 which is established in the United Kingdom;

(f)

an AIF (within the meaning given in regulation 3 of the Alternative Investment Fund Managers Regulations 2013) which is either established in the UK or managed by an AIFM (within the meaning given in regulation 4 of those Regulations) authorised or registered in accordance with those Regulations unless that AIF is set up exclusively for the purpose of serving one or more employee share purchase plans or unless that AIF is a securitisation special purpose entity as defined in Article 4.1(an) of Directive 2011/61/EU, and where relevant, its AIFM is established in the United Kingdom; or

(g)

a central securities depository authorised in accordance with Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories.]

(9)

‘non-financial counterparty’ means an undertaking established in the [F18 United Kingdom] other than the entities referred to in points (1) and (8);

(10)

[F19 ‘pension scheme arrangement’ means:

(a)

an occupational pension scheme within the meaning of section 1(1) of the Pension Schemes Act 1993 which has its main administration in the United Kingdom, including the trustees and managers of such a scheme, and any legal entity set up for the purpose of investment of such a scheme acting solely and exclusively in its interest;

(b)

occupational retirement provision businesses of insurance and reinsurance undertakings within the meaning of section 417 of FSMA, provided that all assets and liabilities corresponding to the businesses are ring-fenced, managed and organised separately from the other activities of the insurance or reinsurance undertaking, without any possibility of transfer;

(c)

any other authorised and supervised entities, or arrangements, established in the United Kingdom, provided that:

(i)

they are recognised under the law applying to any part of the United Kingdom; and

(ii)

their primary purpose is to provide retirement benefits;]

(11)

‘counterparty credit risk’ means the risk that the counterparty to a transaction defaults before the final settlement of the transaction’s cash flows;

(12)

‘interoperability arrangement’ means an arrangement between two or more CCPs that involves a cross-system execution of transactions;

(13)

[F20 “competent authority” means:

(a)

the relevant competent authority referred to in the legislation (or the relevant competent authority of the firm, institution, undertaking or other entity) referred to in paragraphs (a) to (g) of point (8);

(b)

the competent authority referred to in Article 10(5); or

(c)

the authority designated under Article 22;]

(14)

‘clearing member’ means an undertaking which participates in a CCP and which is responsible for discharging the financial obligations arising from that participation;

(15)

‘client’ means an undertaking with a contractual relationship with a clearing member of a CCP which enables that undertaking to clear its transactions with that CCP;

(16)

‘group’ means the group of undertakings consisting of a parent undertaking and its subsidiaries within the meaning of [F21 section 1162 of the Companies Act 2006] or [F22 a group of undertakings meeting the conditions in Article 113(6) of the Capital Requirements Regulation];

(17)

‘financial institution’ means an undertaking other than a credit institution, the principal activity of which is to acquire holdings or to carry on one or more [F23 of the Annex I activities listed in points (2) to (12) and for this purpose “Annex I activities” has the meaning given in Article 4(1)(26A) of the Capital Requirements Regulation];

(18)

‘financial holding company’ means a financial institution, the subsidiary undertakings of which are either exclusively or mainly credit institutions or financial institutions, at least one of such subsidiary undertakings being a credit institution, and which is not a mixed financial holding company within the meaning of [F24 Article 4(1)(21) of the Capital Requirements Regulation];

(19)

‘ancillary services undertaking’ means an undertaking the principal activity of which consists in owning or managing property, managing data-processing services, or a similar activity which is ancillary to the principal activity of one or more credit institution;

(20)

‘qualifying holding’ means any direct or indirect holding in a CCP or trade repository which represents at least 10 % of the capital or of the voting rights, as set out in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market(1), taking into account the conditions regarding aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the CCP or trade repository in which that holding subsists;

(21)

‘parent undertaking’ means a parent undertaking as described in [F25 section 1162 of the Companies Act 2006];

(22)

‘subsidiary’ means a subsidiary undertaking as described in [F26 section 1162 of the Companies Act 2006], including a subsidiary of a subsidiary undertaking of an ultimate parent undertaking;

(23)

‘control’ means the relationship between a parent undertaking and a subsidiary, as described in [F27 section 1162 of the Companies Act 2006];

(24)

‘close links’ means a situation in which two or more natural or legal persons are linked by:

(a)

participation, by way of direct ownership or control, of 20 % or more of the voting rights or capital of an undertaking; or

(b)

control or a similar relationship between any natural or legal person and an undertaking or a subsidiary of a subsidiary also being considered a subsidiary of the parent undertaking which is at the head of those undertakings.

A situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship shall also be regarded as constituting a close link between such persons.

(25)

‘capital’ means subscribed capital F28 ... in so far it has been paid up, plus the related share premium accounts, it fully absorbs losses in going concern situations, and, in the event of bankruptcy or liquidation, it ranks after all other claims;

(25A)

[F29 “subscribed capital” comprises all amounts, regardless of their actual designations, which, in accordance with the legal structure of the institution concerned, are regarded under the law of any part of the United Kingdom as equity capital subscribed by the shareholders or other proprietors;]

(26)

[F30 “reserves” means reserves as set out in item K.IV of balance sheet format 1 in Section B of Part 1 of Schedule 1 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and profits and losses brought forward as a result of the application of the final profit or loss;]

(27)

‘board’ means administrative or supervisory board, or both, in accordance with [F31 company law applying in any part of the United Kingdom];

(28)

‘independent member’ of the board means a member of the board who has no business, family or other relationship that raises a conflict of interests regarding the CCP concerned or its controlling shareholders, its management or its clearing members, and who has had no such relationship during the five years preceding his membership of the board;

(29)

‘senior management’ means the person or persons who effectively direct the business of the CCP or the trade repository, and the executive member or members of the board[F32 ;]

(30)

[F33 ‘ covered bond ’ means a bond meeting the requirements of Article 129 of [F34 the Capital Requirements Regulation];

(31)

‘ covered bond entity ’ means the covered bond issuer or cover pool of a covered bond.]

(32)

[F35 ‘third country’ means a country other than the United Kingdom;

(33)

‘working day’ means any day other than—

(a)

Saturday or Sunday,

(b)

Christmas Day or Good Friday, or

(c)

a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom;

(34)

‘FCA’ means the Financial Conduct Authority;

(35)

‘PRA’ means the Prudential Regulation Authority;]

(36)

[F36 ‘PRA Rulebook’ means the rulebook published by the PRA containing rules made by that Authority under FSMA as that rulebook has effect on 1 January 2022;]

(37)

[F37 ‘FCA Handbook’ means the handbook published by the FCA containing rules made by that Authority under FSMA as that handbook has effect on 17 August 2022;

(38)

‘FCA investment firm’ has the meaning given in Article 4(1)(2AB) of the Capital Requirements Regulation;

(39)

‘Part 9C rules’ has the meaning given in section 143F(1) of FSMA.]

Textual Amendments

F10 Arts. 2(A1)-(A6) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(2) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F11 Art. 2(1) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(3) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F12 Art. 2(4) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(4) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F13 Art. 2(5) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(5) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F14 Substituted by Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (Text with EEA relevance).

F15 Words in Art. 2(7) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(6)(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F16 Words in Art. 2(7) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(6)(b) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 21(a)(i)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F17 Art. 2(8) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(7) (as amended by S.I. 2019/710, regs. 1(2), 21(a); S.I. 2019/1416, regs. 1(2), 12(a); S.I. 2020/1301, regs. 1, 3, Sch. para. 21(a)(ii)) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F18 Words in Art. 2(9) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(8) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F19 Art. 2(10) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) (No. 2) Regulations 2019 (S.I. 2019/1416), regs. 1(3), 26 (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F20 Art. 2(13) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(9) (as amended by S.I. 2019/1416, regs. 1(2), 12(b)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F21 Words in Art. 2(16) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(10)(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F22 Words in Art. 2(16) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(10)(b) (with savings in S.I. 2019/680, reg. 11 as amended by S.I. 2020/628, regs. 1(3), 13(2)); 2020 c. 1, Sch. 5 para. 1(1)

F23 Words in Art. 2(17) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(11) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F24 Words in Art. 2(18) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(12) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F25 Words in Art. 2(21) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(13) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F26 Words in Art. 2(22) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(13) (with savings in S.I. 2019/680, reg. 11 ); 2020 c. 1, Sch. 5 para. 1(1)

F27 Words in Art. 2(23) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(14) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F28 Words in Art. 2(25) omitted (31.12.2020) by virtue of The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(15) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F29 Art. 2(25A) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(16) (with savings in S.I. 2019/680); 2020 c. 1, Sch. 5 para. 1(1)

F30 Art. 2(26) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(17) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F31 Words in Art. 2(27) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 11(18) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F32 Substituted by Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012.

F33 Inserted by Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012.

F34 Words in Art. 2(30) substituted (31.12.2020) by The Securitisation (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/660), regs. 1(2), 36 (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F35 Art. 2(32)-(35) inserted (31.12.2020) by The Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184), regs. 1(2), 7 (with regs. 11-20) (as substituted by S.I. 2019/405, regs. 1(2), 9) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F36 Art. 2(36) inserted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 24(2)

F37 Art. 2(37)-(39) inserted (17.8.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 (S.I. 2022/838), regs. 1(2), 19(2) (with regs. 24-26)

[F38 Article 2a U.K. Equivalence decisions for the purposes of the definition of OTC derivatives

1 . For the purposes of Article 2(7) of this Regulation, a third-country market shall be considered to be equivalent to [F39 a UK regulated market within the meaning given in Article 2(1)(13A) of the MIFIR] where it complies with legally binding requirements which are equivalent to the requirements [F40 resulting from provisions of the law of the United Kingdom relied on before IP completion day to implement Title 3 of Directive 2014/65/EU] and it is subject to effective supervision and enforcement in that third country on an ongoing basis, as determined by [F41 the Treasury].

2 . [F42 The Treasury may make regulations] determining that a third-country market complies with legally binding requirements which are equivalent to the requirements [F43 resulting from provisions of the law of the United Kingdom relied on before IP completion day to implement Title 3 of Directive 2014/65/EU] and it is subject to effective supervision and enforcement in that third country on an ongoing basis for the purposes of paragraph 1.

F44 ...

3 . [F45 The Treasury and the FCA] shall publish on their websites a list of those markets that are to be considered to be equivalent in accordance with the [F46 regulations made by the Treasury under] paragraph 2. That list shall be updated periodically.

[F47 4. In this Article, references to requirements resulting from provisions of United Kingdom law which was relied on before IP completion day to implement Title 3 of Directive 2014/65/EU are to those requirements as they apply on the day on which the regulations are made by the Treasury under this Article.]]

Textual Amendments

F38 Inserted by Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (Text with EEA relevance).

F39 Words in Art. 2a(1) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(2)(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F40 Words in Art. 2a(1) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(2)(b) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 21(b)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F41 Words in Art. 2a(1) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(2)(c) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F42 Words in Art. 2a(2) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(3)(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F43 Words in Art. 2a(2) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(3)(b) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 21(b)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F44 Words in Art. 2a(2) omitted (31.12.2020) by virtue of The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(3)(c) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F45 Words in Art. 2a(3) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(4)(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F46 Words in Art. 2a(3) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(4)(b) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F47 Art. 2a(4) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 12(5) (as amended by S.I. 2019/1212, reg. 17; S.I. 2020/1301, regs. 1, 3, Sch. para. 45(b)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

Article 3 U.K. Intragroup transactions

1. In relation to a non-financial counterparty, an intragroup transaction is an OTC derivative contract entered into with another counterparty which is part of the same group provided that both counterparties are included in the same consolidation on a full basis and they are subject to an appropriate centralised risk evaluation, measurement and control procedures and that counterparty is established in the [F48 United Kingdom] or, if it is established in a third country, the Commission has adopted an implementing act under Article 13(2) in respect of that third country [F49 before IP completion day or the Treasury have made regulations under that Article in respect of that third country after IP completion day].

2. In relation to a financial counterparty, an intragroup transaction is any of the following:

(a) an OTC derivative contract entered into with another counterparty which is part of the same group, provided that the following conditions are met:

(i)

the financial counterparty is established in the [F50 United Kingdom] or, if it is established in a third country, the Commission has adopted an implementing act under Article 13(2) in respect of that third country [F51 before IP completion day or the Treasury have made regulations under that Article in respect of that third country after IP completion day];

(ii)

the other counterparty is a financial counterparty, a financial holding company, a financial institution or an ancillary services undertaking subject to appropriate prudential requirements;

(iii)

both counterparties are included in the same consolidation on a full basis; and

(iv)

both counterparties are subject to appropriate centralised risk evaluation, measurement and control procedures; [F52 or]

F53 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F54 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) an OTC derivative contract entered into with a non-financial counterparty which is part of the same group provided that both counterparties are included in the same consolidation on a full basis and they are subject to an appropriate centralised risk evaluation, measurement and control procedures and that counterparty is established in the [F55 United Kingdom] or in a third-country jurisdiction for which the Commission has adopted an implementing act as referred to in Article 13(2) in respect of that third country [F56 before IP completion day or the Treasury have made regulations under that Article in respect of that third country after IP completion day].

3. For the purposes of this Article, counterparties shall be considered to be included in the same consolidation when they are both either:

[F57 (a) included in a consolidation in accordance with:

(i) legislation of the United Kingdom that was relied upon immediately before IP completion day to implement Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC;

(ii) UK-adopted international accounting standards, having the meaning given by section 474(1) of the Companies Act 2006; or

(iii) in relation to a group the parent undertaking of which has its head office in a third country, the generally accepted accounting principles of a third country determined to be equivalent to—

(aa) International Financial Reporting Standards by the Commission before IP completion day in accordance with Regulation (EC) No. 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council; or

(ab) UK-adopted international accounting standards (within the meaning of section 474(1) of the Companies Act 2006) in accordance with regulations made by the Treasury after IP completion day under Regulation (EC) No. 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council;]

[F58 (b) covered by the same supervision on a consolidated basis in accordance with the Capital Requirements Regulation [F59 or CRR rules], or in relation to a group the parent undertaking of which has its head office in a third country, the same supervision on a consolidated basis by a third-country competent authority verified as equivalent to that governed by the principles laid down in accordance with the Capital Requirements Regulation [F59 or CRR rules];] [F60 or

(c) belong to a group covered by rules made by the FCA under Part 9C of the FSMA (prudential regulation of FCA investment firms) or in relation to a group the parent undertaking of which has its head office in a third country, belong to a group subject to supervision by a third country competent authority verified as equivalent to Part 9C rules;]

[F61 4. In this Article:

• ‘CRR rules’ has the meaning given in section 144A of the FSMA;

• ‘Part 9C rules’ has the meaning given in section 143F(1) of the FSMA.]

Textual Amendments

F48 Words in Art. 3(1) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(2)(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F49 Words in Art. 3(1) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(2)(b) (as amended by S.I. 2019/1416, regs. 1(2), 13(a); S.I. 2020/1301, regs. 1, 3, Sch. para. 21(c)(i)) (with savings in S.I. 2019/680, reg. 11; 2020 c. 1, Sch. 5 para. 1(1)

F50 Words in Art. 3(2)(a)(i) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(a)(i)(aa) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F51 Words in Art. 3(2)(a)(i) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(a)(i)(bb) (as amended by S.I. 2019/1416, regs. 1(2), 13(b)(i); S.I. 2020/1301, regs. 1, 3, Sch. para. 21(c)(ii)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F52 Word in Art. 3(2)(a) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(a)(ii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F53 Art. 3(2)(b) omitted (31.12.2020) by virtue of The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(b) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F54 Art. 3(2)(c) omitted (31.12.2020) by virtue of The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(b) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F55 Words in Art. 3(2)(d) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(c)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F56 Words in Art. 3(2)(d) inserted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(3)(c)(ii) (as amended by S.I. 2019/1416, regs. 1(2), 13(b)(ii); S.I. 2020/1301, regs. 1, 3, Sch. para. 21(c)(ii)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F57 Art. 3(3)(a) substituted (31.12.2020) by The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/685), reg. 1(2), Sch. 1 para. 63(2) (with reg. 1(3)(4)) (as amended by S.I. 2020/523, regs. 1(2), 25(a)); 2020 c. 1, Sch. 5 para. 1(1)

F58 Art. 3(3)(b) substituted (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 13(4) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F59 Words in Art. 3(3)(b) inserted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 24(3)(a)(i)

F60 Art. 3(3)(c) and word inserted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 24(3)(a)(ii)

F61 Art. 3(4) inserted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 24(3)(b)

(1)

OJ L 390, 31.12.2004, p. 38.