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EU grants final extension for 3rd Country CCPs

The EC has today extended the third-country CCP transitional regime by one year until 28 June 2022. The transitional regime allows non-EU CCPs to benefit from the significantly lower capital charges applicable to “Qualifying” CCPs (essentially an EU-recognised CCP, 3rd country or EU), as long as they have applied for recognition. The following countries are currently CCPs being assessed for equivalent status, a necessary precondition for recognition as a QCCP- Argentina, Chile, China, Colombia, Indonesia, Israel, Malaysia, Russia, Taiwan, Thailand and Turkey.[1] This is the third and final extension allowed under the CRR, if equivalence is not granted to any of the above country list (or is subsequently withdrawn) transactions with EU-based counterparties will be become economically unlikely if not unviable.

The decision is not related to the 21 September 2020 temporary exemption in respect of UK CCPs- LME Clear Limited, ICE Clear Limited and LCH Limited. The exemption recognises the three UK CCPs as third-country CCPs, eligible to transact with EU entities. This is due to expire 30 June 2022.

[1] Note- the Press release refers to the USA as waiting for an equivalence decision in respect of CCPs. For CFTC CCPs this was granted on 15 March 2016. For SEC CCPs this was granted on 27 January 2021.

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