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QCCP – qualifying or questionable? Extended either way

The EC has extended the transition period during which banks may apply lower capital charges to those CCPs not yet authorised under EMIR. CCPs will continue to be regarded as QCCPs for Capital Requirements Regulation (CRR) purposes until 15 December 2014. Article 497(3) of CRR allows the Commission to adopt an implementing act to extend the deadline by six months in exceptional circumstances. Implementing Regulation (EU) (No. 591/2014), which came into force 04 June 2014, duly extends the transitional period for six months from 15 June 2014. Clearly “exceptional circumstances” includes, wholly typical, bureaucratic delay.

QCCP status, while of paramount financial significance, remains an unresolved question. CRD IV defines a QCCP as a CCP that has been recognised under Article 25, or authorised by Article 14 EMIR. However, EMIR itself makes no mention of CCP qualification, and attempts no definition of QCCP as even a transitional entity. Similarly, CRR references the capital calculations to be performed by clearing members of both QCCPs and CCPs (Art. 306 and 310), but does not stipulate the measures to be taken by the CCPs to achieve the qualifying grade. The legislation relies on the Basel III QCCP definition by inference rather than incorporation. The end result is a system of transitional self-certification, whereby QCCPs may avoid the Basel III strictures, while their clients benefit from fractional capital charges.

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