It took a day for negotiators from the European Parliament and the Romanian Presidency of the EU Council to agree on Wednesday 13 March on two key texts concerning the supervision of central counterparties (CCPs) established in the European Union and in third countries (see EUROPE 12213/32): - the revision of the European Market Infrastructure Regulation (EMIR) to establish a new supervisory mechanism (see EUROPE 11807/10) and; - the amendment of Article 22 of the ECB Statute (see EUROPE 11875/20).
The possibility of Brexit makes the adoption of these dossiers urgent. There are currently 16 CCPs established and authorised in the EU, and after Brexit, the 3 CCPs based in the United Kingdom will become de facto third-country CCPs.
An agreement was already at hand at the end of February on the revision of the ‘EMIR’ Regulation (see EUROPE 12199/15) but was put on hold until agreement could be reached on the revision of the ECB's Statute.
The compromise maintains the possibility for the European Securities and Markets Authority (ESMA) to consider, “as a last resort”, that a central counterparty established in a third country is of such systemic importance that it should not benefit from the equivalence regime between the rules of its country of establishment and EU rules.
The CCP in question would then be required to establish itself in the EU in order to be authorised to provide its services. The ESMA is only expected to be responsible for the analysis, while the European Commission would have to formally adopt the decision by an implementing act.
One of the last points to be settled was whether the reference to “as a last resort” for the non-recognition decision should only appear in a recital, as requested by Parliament, or in the article on this mechanism, as requested by the EU Council. It was this second option that won the day, according to a European source.
A 'CCP Supervisory Committee' will also be established within ESMA and will be composed of an independent chairperson, the competent authorities of those Member States with a CCP authorised in the EU and two independent members. The central banks of the countries whose currency is used for the transaction can participate in the committee on certain specific matters, but do not have a voting right.
Parliament will interview the selected members and validate their appointment.
Competences of the ECB. Negotiations on amending Article 22 of the ECB's Statute to extend the regulatory powers of the Frankfurt Monetary Institute to the field of financial instrument clearing took longer, according to the same source, as only two 'trilogues' had been held.
At present, the ECB has regulatory powers only with regard to payment systems with a clearing phase, but not with regard to all clearing systems, including clearing systems for financial instruments, such as central counterparties. In June 2017, the Monetary Institute presented a recommendation to this effect (see EUROPE 11815/17).
The revision of the Statute will enable the ECB to fulfil the new tasks entrusted to the central issuing banks, namely to adopt, in extraordinary situations, temporary obligations towards systemically important third-country central counterparties.
These intervention powers are intended in particular to enable the ECB to limit systemic risk on liquidity and the payments system, explained this source.
Provisions will also make it possible to review the role of the ECB and adapt it regularly in light of market developments, in particular in light of Brexit.
The agreement must now be confirmed by both institutions. (Original version in French by Marion Fontana)