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European Commission Extends CCP Deadline 

June 10, 2015

Markets Media

The European Commission has adopted an implementing act that will extend the transitional period for capital requirements for EU banking groups’ exposures to central counterparties under the Capital Requirements Regulation. The CRR introduced a capital requirement for the exposures of EU banks and their subsidiaries to a CCP.

“The decision will give the market the legal certainty it needs for the next six months,” said Jonathan Hill, EU Commissioner responsible for Financial Stability, Financial Services and Capital Markets Union. “Meanwhile we are continuing to work hard on solving the underlying issues.”

The current transitional period expires on June 15, 2015.

A further extension of the transitional period should enable institutions established in the Union (or their subsidiaries established outside the Union) to avoid significant increase in the own funds requirements due to the lack of recognized CCPs established in each relevant third country which provide, in a viable and accessible way, the specific type of clearing services that Union institutions require. While such an increase may only be temporary, it could potentially lead to the withdrawal of those institutions as direct participants in those CCPs and hence cause disruption in the markets in which those CCPs operate.

CCPs are commercial entities that are interposed between the two counterparties to a transaction, becoming the buyer to every seller and the seller to every buyer.

Read More: MarketsMedia

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