On Feb. 7, EP issued a briefing on EU CMSN implementing decision.
EP issued a briefing which supports ECON discussion of Feb. 3, 2025 on EU CMSN decision 2025/215 determining, for a limited period of time, that the regulatory framework applicable to central counterparties (CCPs) in the UK and NI is equivalent.
In accordance with Reg 648/2012 under art 25(6) of Reg 648/2012 (EMIR).
EU CMSN’s implementing decision extends for three further years the current equivalence decision regarding the UK (i.e. to consider the regulatory framework applicable to central counterparties in the UK equivalent to the one applicable in EU).
The currently applicable equivalence decision is due to expire on Jun. 30, 2025.
The UK has introduced a temporary recognition regime, which suspends key elements of Reg 648/2012 for a period of at least three years, see #120801.
Gives UK BoE wide discretionary powers to withdraw the temporary deemed recognition, which creates legal uncertainty for CCPs recognized under that regime.
Notwithstanding that uncertainty, EU CMSN considers that the third condition for equivalence of UK/EU regimes can still be considered as fulfilled at this point in time.
Possible Concerns
In the recent interinstitutional procedure leading to the adoption of Reg 2024/2987 amending EMIR, EP attached great importance to the reduction of excessive exposures to clearing services of substantial systemic importance provided by CCPs outside EU.
The underlying assumption was not one of protracted extensions of the equivalence regime against a background of regulatory divergence in the UK.
Any extensions may not be in line with overarching idea to shift clearing business towards the EU, delaying effective implementation of the active account requirement.
Moreover, the extension of equivalence decision may disincentivize market participants to further pursue their efforts to reduce their exposure to CCPs outside EU.
The decision could also run counter the co-legislator’s ambitions with regard to EU CMSN's work on delegated acts on active accounts under the revised EMIR regulation.
Effectiveness
The currently applicable equivalence decision is due to expire on Jun. 30, 2025.
Decision 2025/215 applies from Jul. 1, 2025 and expires on Jun. 30, 2028.
