EBA adopts draft standards on capital requirements for CCPs

On 26 September 2012, the European Banking Authority (EBA) adopted draft regulatory technical standards (RTS) on capital requirements for CCPs under EMIR.

The draft RTS require that CCPs hold capital, including retained earnings and reserves, that is at all times at least equal to the sum of:

• the CCP’s gross operational expenses during an appropriate time span for winding down or restructuring its activities;
• the capital necessary to cover the overall operational and legal risks;
• the capital necessary to cover credit, counterparty credit and market risks not covered by specific financial resources; and
• the capital necessary to cover business risk.

The draft RTS will be sent to the EU Commission, which will have three months to decide whether or not they intend to endorse the proposals.  Once endorsed, they will be subject to further ratification by both the EU Parliament and the EU Council.  If fully approved, they will take the form of a European regulation and so will be directly applicable in their final form without the requirement for further transposition by Member States.

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