ESMA has welcomed the European Commission’s communication on a contingency plan on central clearing in the event of a no-deal Brexit.
The European Securities and Markets Authority (ESMA) has welcomed the European Commission’s communication on a contingency plan on central clearing in the event of a no-deal Brexit.
In its communication, the commission said it would act, to the extent necessary, to address financial stability risks in the commission arising from the withdrawal of the UK without any agreement.
If this scenario occurred then the commission would adopt a temporary and conditional equivalence decision in order to ensure that there will be no disruption to central clearing.
According to ESMA, its board of supervisors supports the continued access to UK central clearing counterparties (CCPs) to limit the risk of disruption in central clearing and to avoid negatively impacting EU financial market stability.
ESMA is engaging with the commission to plan the preparatory actions for the recognition process of UK CCPS, in the case of a no-deal scenario.
It was revealed that 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 next year, would all the conditions of European Markets Infrastructure Regulation, including any conditions set out in the equivalence decision be fulfilled.
