On June 11, the European Commission (the Commission) published two consultations in relation to the proposed delegated acts (Delegated Acts) on tiering and comparable compliance (the Tiering Consultation and the Comparable Compliance Consultation, together the Consultations) for third-country central counterparties (TC CCPs) as part of its review of the European Market Infrastructure Regulation (EMIR). According to the Commission, the proposed Delegated Acts aim to:

  • improve the European Union’s (EU) capacity to manage and address external risks to the financial system; and
  • contribute to the resilience of financial market infrastructure by promoting the international role of the euro and strengthening Europe’s economic and financial sovereignty.

The proposed Delegated Acts introduce a new system under EMIR known as comparable compliance, whereby TC CCPs that are deemed systemically important can ask the European Securities and Markets Authority (ESMA) to assess whether compliance with their own national rules equates to compliance with EU requirements. The Delegated Acts also consider the requirements for so-called ‘tiering’ TC CCPs under EMIR. ‘Tier 2’ TC CCPs are, or are likely to become, systemically important to the EU’s financial stability, and are subject to more detailed oversight and supervision by ESMA, whereas ‘Tier 1’ TC CCPs are considered non-systemic and therefore are subject to more deferential oversight by ESMA. .

A key takeaway from the current drafting of the proposed delegated acts is that the Commission confirms that United States (US) derivatives clearing organizations will not be deemed to be Tier 2 TC CCPs under the Delegated Acts and, therefore, not classified as “systemically important” or subjected to additional regulation by the EU.

The deadline for responses to the Consultations is July 9.

The Tiering Consultation is available here.

The Comparable Compliance Consultation is available here.