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European Commission extends transitional period for capital requirements for banks' exposures to CCPs 

June 4, 2015

Press Release, European Commission

The European Commission has today adopted an implementing act that will extend the transitional period for capital requirements for EU banking groups’ exposures to central counterparties (CCPs) under the Capital Requirements Regulation (CRR). 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 15 June 2015. Today's decision is available here.

Background:

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. A CCP's main purpose is to manage the risk that could arise if one counterparty is not able to make the required payments when they are due – i.e. defaults on the deal. The size of the requirement depends on whether a CCP is labelled as 'qualifying' or not. Capital charges for exposures to non-qualifying CCPs are higher.

In order for a CCP to be considered a 'qualifying' CCP, it has to be either authorised (for those established in the EU) or recognised (for those established outside the EU) in accordance with the rules laid down in the European Market Infrastructure Regulation (EMIR).

Read more: European Commission

 
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