Managing risks of a no-deal Brexit in the area of central clearing

Nov 23, 2018
The European Securities and Markets Authority (ESMA) has published a public statement to address the risks of a no-deal Brexit scenario in the area of central clearing. The ESMA board of supervisors supports the continued access to UK central clearing counter-parties (CCP) to limit the risk of disruption in central clearing and to avoid negatively impacting EU financial market stability.

The ESMA therefore welcomes the communication Preparing for the Withdrawal of the United Kingdom from the European Union on 30 March 2019: a Contingency Action Plan, published on 13 November 2018 where the European Commission stated that it will act, to the extent necessary, to address financial stability risks in the EU arising from the withdrawal of the UK without any agreement. In such a scenario, the European Commission has stated that it will adopt a temporary and conditional equivalence decision in order to ensure that there will be no disruption to central clearing.

The ESMA is therefore engaging with the European Commission to plan, as far as possible, the preparatory actions for the recognition process of UK CCPs, in case of a no-deal scenario. The ESMA has already started engaging with UK CCPs to carry out preparatory work. The aim is to ensure continued access to UK CCPs for EU clearing members and trading venues as of 30 March 2019, should all the conditions in EMIR, including any conditions set out in the equivalence decision, be fulfilled.

Source: European Securities and Markets Authority.