Euro Zone financial news

Securities and markets regulatory information, June 2021 #3 | Hogan Lovells

Contents

  • UK CCPs: BoE dialogue paper on supervisory stress take a look at framework
  • Proposed Regulation on pilot regime for market infrastructures primarily based on DLT: ECB opinion
  • CRAs: ESMA technical recommendation on supervisory charges

UK CCPs: BoE dialogue paper on supervisory stress take a look at framework

The Financial institution of England (BoE) has printed a dialogue paper on supervisory stress testing of UK central counterparties (CCPs) and introduced its first public CCP stress take a look at, which can run over a nine-month interval in 2021-22, starting across the begin of the fourth quarter of 2021. The three recognised UK CCPs (ICE Clear Europe Ltd (ICEU), LCH Ltd (LCH) and LME Clear Ltd (LMEC)) will take part. All of their clearing providers will probably be in scope. This stress take a look at will probably be exploratory in nature. The CCPs is not going to be examined towards regulatory necessities and there will probably be no pass-fail thresholds. Nonetheless, if deficiencies are recognized, the BoE will take remedial motion. The outcomes from the train will probably be printed across the finish of the second quarter of 2022.

The BoE intends to make use of CCP supervisory stress testing as a key mechanism by which to undertake assessments of the resilience of particular person CCPs, in addition to assessments of the broader resilience of the clearing community and its interactions with the remainder of the monetary system. CCP supervisory stress assessments may even be used to advertise transparency and assist set up public confidence within the UK CCP system.

Within the dialogue paper, the BoE units out a spread of proposals and choices for the design of the CCP supervisory stress-testing framework. Feedback will be made on the dialogue paper till 17 December 2021. The BoE will use responses acquired, along with the findings from the 2021-22 stress take a look at, to tell additional improvement of the CCP supervisory stress-testing framework.

Proposed Regulation on pilot regime for market infrastructures primarily based on DLT: ECB opinion

An opinion of the European Central Financial institution (ECB) on a proposed Regulation on a pilot regime for market infrastructures primarily based on distributed ledger know-how (DLT) has been printed within the Official Journal of the European Union. The Fee adopted the proposed Regulation in September 2021 as a part of its Digital Finance Technique.

The European Parliament and the Council of the EU wrote to the ECB asking it to provide the opinion in November 2020. The intention of the proposed Regulation is to allow funding companies, market operators and central securities depositories (CSDs) to function market infrastructures primarily based on DLT, both as a DLT multilateral buying and selling facility (DLT MTF) or a DLT securities settlement system (DLT SSS).

The ECB usually welcomes the proposed Regulation. Nonetheless, it raises quite a lot of common issues, in addition to issues referring to financial coverage, oversight and systemic points, monetary stability elements, and prudential supervision. The place the ECB recommends that the proposed Regulation is amended, particular drafting proposals are set out in a separate technical working doc, which will be discovered hooked up to the unique model of the opinion.

CRAs: ESMA technical recommendation on supervisory charges

Following its January 2021 session, the European Securities and Markets Authority (ESMA) has printed a last report setting out its technical recommendation to the European Fee on supervisory charges charged to credit standing companies (CRAs). The technical recommendation has been despatched to the European Fee and can feed into the upcoming evaluate of the Charges Regulation.

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