Regulation (EU) 2021/23 on a framework for the recovery and resolution of central counterparties

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Series Details L 22, Pages 1-102
Publication Date 22/01/2021
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Regulation (EU) 2021/23 - formally signed by the co-legislators on 16 December 2020 - setting out a framework applying to central counterparties (CCPs) and their authorities in preparing for and dealing with financial difficulties. It amends Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132. This is a text with EEA relevance.

Further information:

A central counterparty (CCP) intervenes between participants in financial markets to act as the buyer to every seller and the seller to every buyer for a specified set of contracts. CCPs deal in financial transactions in various asset classes, and their services are usually provided to their clearing members who have a direct contractual link with CCPs and the clients of the clearing members. Through their activity, CCPs reduce the 'counterparty risk', which is the risk that a financial transaction is not successful because the buyer is unable to pay the price or the seller unable to deliver the securities. CCPs manage essential risks in financial markets.

The draft law was put forward by the Commission on 28 November 2016, as the scale and importance of CCPs were expected to expand with the gradual implementation of a G20 commitment to increase transparency of derivative contracts traded over-the-counter (OTC) by imposing an obligation to centrally clear liquid and standardized contracts via CCPs. The European Market Infrastructures Regulation (EMIR) lays down prudential requirements for CCPs, as well as requirements regarding their operation, oversight and risk management.

The European Parliament endorsed a negotiating position on 27 March 2019, followed by the Council of the European Union on 4 December. An informal agreement between the co-legislators on a compromise text was reached on 23 June 2020. The Council formally agreed to it on 17 November. The Parliament's plenary session formally endorsed it on 14 December. The Act was signed on 16 December and published in the Official Journal on 22 January 2021.

Related Links
Commentary and Analysis
EPRS: Briefing, March 2017: Initial Appraisal of a European Commission Impact Assessment
EPRS: Briefing, April 2018: Recovery and resolution of central counterparties (CCPs)

EurActiv, 28/11/2016: Commission proposes new CCP financial rules

EUR-LEX: COM(2016)856: Proposal for a Regulation on a framework for the recovery and resolution of central counterparties
EUR-Lex: SWD(2016)368: Impact assessment
EUR-Lex: SWD(2016)369: Executive summary of the impact assessment
European Parliament: Legislative Observatory 2016/0365(COD): Procedure File for Proposal on Framework for the recovery and resolution of central counterparties
European Parliament: Legislative Train Schedule: Recovery and Resolution of Financial Institutions other than banks / central counterparties
European Commission: Recovery and resolution of central counterparties (CCPs)
European Commission: Press Release, 28/11/2016: Creating a Stronger Financial System: New EU rules for the recovery and resolution of Central Counterparties
European Commission: Memo, 28/11/2016: Central Counterparties Recovery and Resolution Proposal: Frequently Asked Questions
European Commission: Opening statement by Vice-President Valdis Dombrovskis at the press conference on the recovery and resolution of Central Counterparties, 28 November 2016
Council of the European Union: Press Release, 23/06/2020: Clearing houses: Presidency and Parliament reach political agreement on recovery and resolution

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