FIA Welcomes Progress On EU Clearing House Access
FIA President and CEO Walt Lukken made the following statement regarding reported action by the European Commission to deem UK’s regulatory and legal framework for UK CCPs as equivalent under EMIR for a 12-month period in the event of a no-deal Brexit. FIA believes this is an important step toward ensuring market stability during this uncertain time and continued access to UK CCPs by EU27 firms, and we hope that the other necessary steps for timely recognition of UK CCPs will follow shortly.
— FIA (@FIAconnect) December 12, 2018
“FIA is highly encouraged by the action of the European Commission to grant temporary and conditional equivalence status that will not disrupt these essential markets. Futures, options and swaps are transacted by commercial companies every day to hedge marketplace risks such as price fluctuations in currencies or commodities. Without these vital markets, companies and their customers would have likely seen prices increase and associated market volatility that doesn’t benefit anyone,” said FIA President and CEO Walt Lukken. “FIA personally thanks European Commission’s Vice-President Valdis Dombrovskis for taking an active role in working with the industry to smooth out this otherwise difficult situation.”
FIA, together with other trade associations, had sought greater certainty from European policymakers that a grace period would be extended for continued access to UK CCPs by market participants in the EU27.
Against the background of a hard Brexit and increasing risks to financial stability, the European Association of CCP Clearing Houses (EACH) welcomes the communication of the European Commission regarding a temporary and conditional regime for equivalence and recognition of UK CCPs in the EU.
EACH believes that to ensure financial stability and avoid amongst other the disorderly close out of positions of EU clearing members in UK CCPs, it is critical to urgently enshrine into EU law the possibility of a temporary and conditional equivalence regime.
This would provide the legal certainty needed for market participants to cope with a ‘no-deal’ scenario in the least disruptive manner, meeting the end goal of ensuring a smooth transition from authorisation to temporary recognition for UK CCPs. EACH also requests a reciprocal approach by UK authorities and therefore welcomes the steps already taken by UK authorities to enshrine into UK law a temporary and conditional equivalence regime for EU CCPs.
The total value of UK financial services exports remained stable in 2020.
Temporary equivalence was set to expire on June 30, 2022.
The Bank has new powers for reviewing CCPs following Brexit.
Restricting access to London CCPs would result in collateral damage for EU banks and end users.
The review is an opportunity to recalibrate MiFID II regulations post-Brexit.