The European Commission has confirmed in a speech that the temporary equivalence of UK Central Clearing Counterparties (CCP) will be extended further than the end of March 2020, as previously granted. This story on The Trade News reports on the speech in which confirmation was made. The extension means that in the event of a no-deal Brexit, UK based CCPs will continue to be recognised by the EU, permitting Investment Firms to carry on using such facilities during the period of extension. In the event of a no-deal exit, if no equivalence is granted by the EU to the UK CCPs, some Investment Firms will need to make alternative clearing arrangements for certain activities.
The speech follows an open letter sent by several industry associations requesting the extension, a copy of which can be found here. The letter points out that the lapse of the equivalence would cause some significant disruption, given that alternative arrangements have not been made. It also refers to the upcoming EMIR 2.2 changes, which deal with the use of third country CCPs by EU firms in general, in particular when the CCPs has been designated as systemically important and placed into “Tier 2”. ESMA recently published several sets of technical advice on EMIR 2.2, which can be found here.