OCC commends on QCCP extension
13 June 2016 Frankfurt
Image: Shutterstock
Equity derivatives clearinghouse the Options Clearing Corporation (OCC) has praised the European Commission’s decision to delay the deadline for US CCPs to become fully fledged qualifying central counterparties (QCCPs) in the EU.
The endorsement from the OCC comes after the European Commission formally acknowledged US CCP regulation as equivalent to the EU’s in March.
CCPs wishing to be recognised by the European Securities and Markets Authority were initially given until 15 June to complete the transition. Acknowledging that the changes are unlikely to be completed by June, the European Commission extended the deadline to 15 December.
In order to avoid disrupting international financial markets during the transitional period, all CCPs that institutions established in the EU clear with are temporarily considered as qualifying CCPs. Certain CCPs are also required to report the total amount of initial margin received from their clearing members.
According to the OCC, the transition also means its EU-affiliate clearing members’ risk-weighted asset exposures to OCC would increase from about $924 million to reach more than $75 billion, requiring them to maintain additional capital of about $5.25 billion.
OCC executive chairman Craig Donohue commented: "We commend the European Commission for its decision to extend the transitional period deadline for CCPs such as OCC to be recognised as QCCPs.”
“This announcement provides some important breathing room for the listed options industry. We look forward to continuing to work with the European Commission, the European Securities and Markets Authority, and the US Securities and Exchange Commission (SEC) as they work to come to an agreement on a common approach for the regulation of cross-border QCCPs."
Donohue continued: "Recognition of US CCPs subject to the SEC's jurisdiction is important to OCC and market participants for several reasons, foremost among them that it would allow EU banks' and EU bank affiliates' exposure to those CCPs to be subject to a lower risk weight in calculating their regulatory capital."
The endorsement from the OCC comes after the European Commission formally acknowledged US CCP regulation as equivalent to the EU’s in March.
CCPs wishing to be recognised by the European Securities and Markets Authority were initially given until 15 June to complete the transition. Acknowledging that the changes are unlikely to be completed by June, the European Commission extended the deadline to 15 December.
In order to avoid disrupting international financial markets during the transitional period, all CCPs that institutions established in the EU clear with are temporarily considered as qualifying CCPs. Certain CCPs are also required to report the total amount of initial margin received from their clearing members.
According to the OCC, the transition also means its EU-affiliate clearing members’ risk-weighted asset exposures to OCC would increase from about $924 million to reach more than $75 billion, requiring them to maintain additional capital of about $5.25 billion.
OCC executive chairman Craig Donohue commented: "We commend the European Commission for its decision to extend the transitional period deadline for CCPs such as OCC to be recognised as QCCPs.”
“This announcement provides some important breathing room for the listed options industry. We look forward to continuing to work with the European Commission, the European Securities and Markets Authority, and the US Securities and Exchange Commission (SEC) as they work to come to an agreement on a common approach for the regulation of cross-border QCCPs."
Donohue continued: "Recognition of US CCPs subject to the SEC's jurisdiction is important to OCC and market participants for several reasons, foremost among them that it would allow EU banks' and EU bank affiliates' exposure to those CCPs to be subject to a lower risk weight in calculating their regulatory capital."
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