CCPs are financial market infrastructures that reduce and manage the counterparty risks in financial markets. In 2008, the bankruptcy of Lehman Brothers, a bank very active in OTC derivatives, demonstrated the ability of CCPs to successfully manage a default and prevent contagion between market participants. According to the analysis of the European Commission, the opacity of the market and the lack of adequate risk management ‘prevented, on the one hand, other market participants from knowing exactly what the exposures of their counterparties were to these three entities (the events in the credit default swaps market after Lehman’s bankruptcy are a point in case), which resulted in mistrust and the drying up of liquidity in the inter-bank money market. It also prevented regulators from being able to identify early the risks building up in the system, the extent to which risks were being concentrated in a handful of institutions and consequently the effects that their default would have for financial stability.’  (‘Ensuring efficient, safe and sound derivatives markets’, European Commission staff working paper, COM(2009) 332 final)

The G20 leaders agreed to improve the OTC derivatives market through the following measures:

• All standardized OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and
• Cleared through central counterparties by end-2012 at the latest.
• OTC derivative contracts should be reported to trade repositories.
• Non-centrally cleared contracts should be subject to higher capital requirements.

In the EU, the following steps still need to be taken in order to fully implement the European Market Infrastructure Regulation (EMIR):

• Enforcement of the clearing mandate in the EU (currently expected for the beginning of 2016 for certain asset classes)
• Finalisation of the equivalence decisions for different jurisdictions and recognition of third-country CCPs

In line with the EMIR provisions, the European Commission started the review of the legislation in 2015 and this lead to a total of three main framework pieces of EMIR legislation:

23 Oct 2019  European Union – EMIR 2.2 framework legislation (Level 1)

20 May 2019  European Union – EMIR Refit framework legislation (Level 1)

27 Jul 2012    European Union – EMIR framework legislation (Level 1)

These pieces of legislation are supplemented by Level 2 and Level 3 acts, which include the following ESMA Guidelines and Q&As.

List of CCPs authorised or recognised by ESMA

• List of EU CCPs authorised
• List of Non-EU CCPs recognised
• List of Non-EU CCPs that have applied

EMIR Questions and Answers

• ESMA Q&A
• European Commission FAQ

Public authorities publications

23 Oct 2019  European Union – EMIR 2.2 framework legislation (Level 1)

20 May 2019  European Union – EMIR Refit framework legislation (Level 1)

23 Nov 2016  European Commission – European Commission proposal on EMIR review

05 Nov 2015  ESMA – Consultation paper on indirect clearing under EMIR

21 May 2015  European Commission – Publication of the European Commission consultation on the EMIR review

30 Oct 2014   European Commission – Equivalence of the regulator framework of Australia CCPs

04 Sep 2014   European Commission – Equivalence of the regulator framework of Hong Kong CCPs

10 Jun 2014   European Commission – Equivalence of the regulator framework of Japan CCPs

04 Jun 2013   European Commission – Equivalence of the regulator framework of Singapore CCPs

28 May 2013  ESMA – Guidelines on the implementation of the CPMI-IOSCO PFMI (Level 2)

19 Dec 2012   ESMA – Guidelines for interoperability arragements (Level 2)

04 Jul 2012    ESMA – Guidelines on written agreements between members of CCP colleges (Level 2)

23 Feb 2013   European Commission – Delegated regulation on regulatory technical standards on colleges for CCPs (Level 2)

23 Feb 2013   European Commission – Regulatory technical standards on capital requirements for central counterparties (Level 2)

23 Feb 2013   European Commission – Regulatory technical standards on indirect clearing arrangements and the clearing obligation (Level 2)

23 Feb 2013   European Commission – Regulatory technical standards on requirement for central counterparties (Level 2)

23 Feb 2013   European Commission – Implementing technical standards to be maintained by CCPs (Level 2)

27 Jul 2012    European Union – EMIR framework legislation (Level 1)

24 Sep 2009   FSB –  Report to G20 leaders on improving financial regulation

25 Sep 2009   G20 – Leaders’ statement the Pittsburg summit