The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No. 2) Regulations 2013

Transitory provision: recovery plans and loss allocation for recognised clearing houses applying for authorisation under EMIR

6.—(1) In this regulation—

“EMIR” means Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories(1);

“relevant CCP” means a body corporate or an unincorporated association which—

(a)

is established in the United Kingdom;

(b)

was a recognised clearing house immediately before 15th March 2013; and

(c)

applies to the Bank of England in accordance with Article 17 of EMIR for an order granting authorisation for the purposes of that Article;

“transition period” means the transition period for a relevant CCP, determined in accordance with regulations 52(1) and (2) of the Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013.

(2) Paragraphs (3) and (4) modify the application of Parts 3 and 4 of the Schedule to the Recognition Requirements Regulations to a relevant CCP during its transition period(2).

(3) If the relevant CCP’s application in accordance with Article 17 of EMIR is not determined before 1st February 2014—

(a) paragraph 23A of the Schedule to the Recognition Requirements Regulations applies to the relevant CCP from 1st February 2014; and

(b) the Recognition Requirements Regulations apply to the relevant CCP with the following paragraph inserted into Part 4 of the Schedule, after paragraph 28—

“Loss Allocation

28A.   The default rules must contain provision ensuring that losses that—

(a) arise as a result of the default of a member of the clearing house; and

(b) threaten the clearing house’s solvency;

are allocated with a view to ensuring that the clearing house can continue to provide its exempt activities.”.

(4) If the relevant CCP’s application in accordance with Article 17 of EMIR is not determined before 1st May 2014, the Recognition Requirements Regulations apply to the relevant CCP with—

(a) the modifications mentioned in paragraph (3); and

(b) the following paragraph inserted into Part 3 of the Schedule, after paragraph 23A—

“Loss Allocation

23B.   The clearing house must maintain effective arrangements (which may include rules) for ensuring that losses that—

(a) arise otherwise than as a result of the default of a member of the clearing house; and

(b) threaten the clearing house’s solvency;

are allocated with a view to ensuring that the clearing house can continue to provide its exempt activities.”.

(1)

OJ No L 201, 27.7.2012, p1.

(2)

Regulation 52(5) of S.I. 2013/504 applies the Recognition Requirements Regulations to a relevant CCP during its transition period without the amendments made to the Recognition Requirements Regulations by S.I. 2013/504.