(1)

Regulation (EU) No 648/2012 of the European Parliament and of the Council (4) contributes to the reduction of systemic risk by increasing the transparency of the over-the-counter (OTC) derivatives market and by reducing the counterparty credit and operational risks associated with OTC derivatives.

(2)

Post-trade infrastructures are a fundamental aspect of the capital markets union and are responsible for a range of post-trade processes, including clearing. An efficient and competitive clearing system in the Union is essential for the functioning of Union capital markets and is a cornerstone of the financial stability of the Union. It is therefore necessary to lay down further rules to improve the efficiency of clearing services in the Union in general, and of central counterparties (CCPs) in particular, by streamlining procedures, especially for the provision of additional services or activities and for changing CCPs’ risk models, by increasing liquidity, by encouraging clearing at Union CCPs, by modernising the framework under which CCPs operate, and by providing the necessary flexibility to CCPs and other financial actors to compete within the internal market.

(3)

Union market participants need to have more options as regards access to safe and efficient clearing services. To attract business, CCPs must be safe and resilient. Regulation (EU) No 648/2012 lays down measures to increase the transparency of derivatives markets and mitigate risks through clearing and the exchange of margin. In that respect, CCPs play an important role in mitigating financial risks. Rules should therefore be laid down to further enhance the stability of Union CCPs, notably by amending certain aspects of the regulatory framework. In addition, and in recognition of Union CCPs’ role in preserving the financial stability of the Union, it is necessary to strengthen further the supervision of Union CCPs, with particular attention to their role within the broader financial system and the fact that they provide cross-border services.

(4)

Central clearing is a global business and Union market participants are active internationally. However, since the adoption of amendments to Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs, concerns have been expressed repeatedly, including by the European Supervisory Authority (European Securities and Markets Authority) (ESMA) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (5), about the ongoing risks to the financial stability of the Union arising from the excessive concentration of clearing in some third-country CCPs, in particular due to the potential risks that can arise in stressed market conditions. In the short term, in order to mitigate the risk of cliff edge effects related to the withdrawal of the United Kingdom (UK) from the Union and the subsequent abrupt disruption of Union market participants’ access to UK CCPs, the Commission adopted a series of equivalence decisions to maintain access to UK CCPs. However, the Commission called on Union market participants to reduce, in the medium term, their excessive exposures to systemic third-country CCPs. The Commission reiterated that call in its communication of 19 January 2021 entitled ‘The European economic and financial system: fostering openness, strength and resilience’. The risks and effects of excessive exposures to systemic third-country CCPs were considered in the report published by ESMA in December 2021 following an assessment conducted pursuant to Article 25(2c) of Regulation (EU) No 648/2012. That report concluded that some services provided by systemically important UK CCPs were of such substantial systemic importance that the current arrangements under Regulation (EU) No 648/2012 were insufficient to manage the risks to the financial stability of the Union. To mitigate the potential financial stability risks to the Union due to the continued excessive reliance on systemic third-country CCPs, but also to enhance the proportionality of measures for third-country CCPs that present fewer risks to the financial stability of the Union, it is necessary to further tailor the framework introduced by Regulation (EU) 2019/2099 of the European Parliament and of the Council (6) to the risks presented by different third-country CCPs.

(5)

Regulation (EU) No 648/2012 exempts intragroup transactions from the clearing obligation and the margin requirements. To provide more legal certainty and predictability concerning the framework for intragroup transactions, the regime for equivalence decisions in Article 13 of Regulation (EU) No 648/2012 should be replaced by a simpler framework. Article 3 of Regulation (EU) No 648/2012 should therefore be amended to replace the need for an equivalence decision with a list of third countries for which an exemption should not be granted. In addition, Article 13 of Regulation (EU) No 648/2012 should be amended to provide for equivalence decisions only in relation to Article 11 of that Regulation. Since Article 382 of Regulation (EU) No 575/2013 of the European Parliament and of the Council (7) refers to intragroup transactions within the meaning of Regulation (EU) No 648/2012, Article 382 of Regulation (EU) No 575/2013 should also be amended accordingly.

(6)

Given the fact that entities that are established in third countries that have strategic deficiencies in their national anti-money laundering and counter terrorist financing regimes (‘high-risk third countries’), as referred to in Regulation (EU) 2024/1624 of the European Parliament and of the Council (8), or in third countries listed in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, are subject to a less stringent regulatory environment, their operations might increase the risk, including due to increased counterparty credit risk and legal risk, to the financial stability of the Union. Consequently, such entities should not be eligible to be considered in the framework of intragroup transactions.

(7)

Strategic deficiencies in national regimes on anti-money laundering and counter terrorist financing or a lack of cooperation for tax purposes are not necessarily the only factors that can influence the risks, including counterparty credit risk and legal risk, associated with derivative contracts. Other factors, such as the supervisory framework, also play a role. The Commission should therefore be empowered to adopt delegated acts to identify the third countries whose entities are not permitted to benefit from intragroup exemptions despite those third countries not being identified as high-risk third countries or listed in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes. In light of the fact that intragroup transactions benefit from reduced regulatory requirements, regulators and supervisors should carefully monitor and assess the risks associated with transactions involving entities from third countries.

(8)

To ensure a level playing field between Union and third-country credit institutions offering clearing services to pension scheme arrangements, an exemption from the clearing obligation under Regulation (EU) No 648/2012 should be introduced where a Union financial counterparty that is subject to the clearing obligation or a non-financial counterparty that is subject to the clearing obligation enters into a transaction with a pension scheme arrangement established in a third country which is exempted from the clearing obligation under that third country’s national law.

(9)

Regulation (EU) No 648/2012 promotes the use of central clearing as the main risk-mitigation technique for OTC derivatives. The risks associated with an OTC derivative contract are therefore best mitigated when that OTC derivative contract is cleared by a CCP authorised or recognised under Regulation (EU) No 648/2012 (the ‘authorised or recognised CCP’). It follows that in the calculation of the position that is compared to the clearing thresholds specified pursuant to Article 10(4), point (b), of Regulation (EU) No 648/2012, only those OTC derivative contracts that are not cleared by an authorised or recognised CCP should be included in such calculation. In order to ensure that the current prudent coverage of the clearing obligation is not affected by the new methodology, it is appropriate to empower ESMA to also set an aggregate clearing threshold, if needed.

(10)

Post-trade risk reduction (PTRR) services reduce risks, such as credit risk and operational risk, of derivatives portfolios and are therefore a valuable tool for improving the resilience of the OTC derivatives market. They include services such as portfolio compression, portfolio optimisation and rebalancing services. PTRR service providers often use complex financial instruments to ensure that the transactions resulting from PTRR exercises are not subject to the clearing obligation. Doing so limits the usability and accessibility of PTRR services to advanced financial markets participants and reduces the benefits resulting from the use of PTRR services, as the use of complex products that are not subject to the clearing obligation increases risk in the financial system. Given the benefits of PTRR services, their use should be facilitated and made available to a wider group of market participants. Therefore, transactions resulting from PTRR services should be exempted from the clearing obligation. At the same time, to ensure the safe and efficient use of PTRR services, the exemption should be subject to appropriate conditions which are to be further specified and complemented by ESMA.

(11)

It is necessary to address the financial stability risks associated with excessive exposures of Union clearing members and clients to systemically important third-country CCPs (Tier 2 CCPs) that provide clearing services that have been identified by ESMA as clearing services of substantial systemic importance pursuant to Regulation (EU) No 648/2012. In December 2021, ESMA concluded that the provision of certain clearing services provided by two Tier 2 CCPs, namely for OTC interest rate derivatives denominated in euro, OTC interest rate derivatives denominated in Polish zloty, credit default swaps denominated in euro and short-term interest rate derivatives denominated in euro, are of substantial systemic importance for the Union or for one or more of its Member States. As noted by ESMA in its December 2021 assessment report, were those Tier 2 CCPs to face financial distress, changes to those CCPs’ eligible collateral, margins or haircuts may negatively impact the sovereign bond markets of one or more Member States, and more broadly, the financial stability of the Union. Furthermore, disruptions in markets relevant for monetary policy implementation may hamper the transmission mechanism critical to central banks of issue. It is therefore appropriate to require financial counterparties and non-financial counterparties that are subject to the clearing obligation to hold, directly or indirectly, accounts and clear a representative number of transactions at Union CCPs. That requirement should contribute to a reduction in the provision of clearing services of substantial systemic importance by those Tier 2 CCPs. In light of recent market developments, in particular concerning credit default swaps denominated in euro, it is appropriate that the requirement only applies to OTC interest rate derivatives denominated in euro and in Polish zloty and short-term interest rate derivatives denominated in euro, in addition to any other clearing service deemed to be of substantial systemic importance in future assessments pursuant to Regulation (EU) No 648/2012.

(12)

The active account requirement should apply to financial and non-financial counterparties that are subject to the clearing obligation and exceed the clearing thresholds in any of the categories of derivative contracts identified by ESMA as being of substantial systemic importance. When verifying whether they are subject to the active account requirement, counterparties that are part of groups headquartered in the Union should take into account the derivative contracts belonging to clearing services of substantial systemic importance that are cleared by any entity within the group, including entities established in third countries, since those contracts might contribute to the excessive degree of exposure of the group as a whole. Derivative contracts of third-country subsidiaries of Union groups should also be included to prevent those groups from moving their clearing activities outside the Union in order to avoid the active account requirement. A counterparty that is subject to the active account requirement and that belongs to a group should be required to meet the representativeness obligation based on its own transactions. Third-country entities that are not subject to the clearing obligation under Union law are not subject to the obligation to maintain an active account.

(13)

The active account requirement is a new requirement. The novelty of the requirement and the need for market participants to gradually adapt to it should be properly taken into account. That is why it is appropriate that the active account requirement can be met by market participants by establishing permanently functional accounts at Union CCPs. The active account requirement should include operational elements. The account should be suitable for quickly clearing a significant number of trades moved out from a Tier 2 CCP and for clearing all new trades in the categories of derivative contracts identified as being of substantial systemic importance. Those operational elements should also contribute to incentivising counterparties to move trades to the Union. In that regard, it is appropriate to take into account the situation of counterparties that are already clearing a significant amount of their transactions in interest rate derivatives denominated in euro and Polish zloty, and in short-term interest rate derivatives denominated in euro, at Union CCPs. Those counterparties should not be subject to the operational requirements associated with the active account requirement.

(14)

In order to ensure that the active account requirement contributes to the overarching objective of reducing excessive exposures to clearing services of substantial systemic importance provided by third-country CCPs and that the account is not dormant, a minimum number of derivative contracts should be cleared in the active accounts. Those contracts should be representative of the different subcategories of derivative contracts belonging to clearing services of substantial systemic importance (the ‘representativeness obligation’). The representativeness obligation should reflect the diversity of the portfolios of financial and non-financial counterparties subject to the active account requirement. Contracts with different maturities and different sizes should be cleared through the active accounts, as well as contracts of different economic nature, including all classes of interest rate derivatives that are subject to the clearing obligation under Commission Delegated Regulations (EU) 2015/2205 (9) and (EU) 2016/1178 (10) as regards those denominated in Polish zloty. To define the minimum number of derivative contracts that should be cleared through the active accounts, ESMA should identify up to three derivative classes amongst the derivative contracts belonging to the clearing services of substantial systemic importance. ESMA should further identify up to five most relevant subcategories of trades, per derivative class, based on a combination of size and maturity. Counterparties should then be required to clear at least five trades in the reference period in each relevant subcategory. The number of derivative contracts to be cleared should be at least five trades in the reference period on an annual average basis, meaning that in assessing whether counterparties fulfil the representativeness obligation, competent authorities should consider the total number of trades over a year. In order to ensure a proportionate approach and to avoid imposing an excessive burden on counterparties that have limited activity in the different subcategories of derivative contracts identified by ESMA, a de minimis threshold should apply to the representativeness obligation. In addition, the specific business model of Union pension scheme arrangements needs to be properly taken into account. In several cases, such arrangements have a limited number of interest rate derivatives trades, which are concentrated, long-term and with a high notional amount. That is why it is appropriate for a scaled-down representativeness obligation to be established, which should require one trade to be cleared instead of five in the most relevant subcategories per reference period. Member States should introduce appropriate periodic penalty payments for cases where a counterparty subject to the active account requirement fails to meet its obligations with regard to the operational criteria or the representativeness obligation.

(15)

ESMA has an important role in the assessment of the substantial systemic importance of third-country CCPs and their clearing services. By 18 months following the entry into force of this Regulation, or at any point in time in the case of a financial stability risk, ESMA should assess and report to the European Parliament, the Council and the Commission on the effects of this Regulation in reducing exposures to systemically important Tier 2 CCPs. ESMA should propose any measures it deems necessary, as well as quantitative thresholds, and accompany them with an impact assessment and a cost-benefit analysis. ESMA should cooperate with the European System of Central Banks (ESCB), the European Systemic Risk Board (ESRB) and the Joint Monitoring Mechanism established by this Regulation when drafting its assessment and report. Within six months of receiving the ESMA report, the Commission should prepare its own report which may be accompanied, where appropriate, by a legislative proposal.

(16)

With the aim of encouraging clearing in, and ensuring the financial stability of, the Union, and to ensure that clients are aware of their options and can take an informed decision as regards where to clear their derivative contracts, clearing members and clients that provide clearing services in both authorised or recognised CCPs should inform their clients of the option to clear a derivative contract through a Union CCP. The information provided should include information on all costs that will be charged to clients by clearing members and clients that provide clearing services. The information on costs that clearing members and clients that provide clearing services should disclose should be limited to the Union CCPs in relation to which they provide clearing services. The obligation to inform clients of the option to clear a derivative contract through a Union CCP is distinct from the active account requirement and is intended to apply more generally to ensure awareness of the clearing offer of Union CCPs.

(17)

To ensure that competent authorities have the necessary information on the clearing activities undertaken by clearing members or clients in recognised third-country CCPs, a reporting obligation should be introduced for such clearing members or clients. The information to be reported should distinguish between securities transactions, derivative transactions on regulated markets and OTC derivative transactions. ESMA should provide details on the content and format of the information to be reported, and in doing so should ensure that the obligation does not create additional reporting requirements, unless necessary, so that the administrative burden for clearing members and clients is minimised.

(18)

Under the current framework, ESMA receives transaction data under Regulation (EU) No 648/2012 and Regulation (EU) 2015/2365 of the European Parliament and of the Council (11), which provide a Union-wide view on markets but not on CCPs’ risk management. ESMA should, therefore, in addition to such data, require timely and reliable information on CCPs’ activities and practices to fulfil its financial stability mandate. Accordingly, a formal reporting requirement regarding CCP risk management data by Union CCPs to ESMA should be introduced. The introduction of such a requirement would also help to further strengthen standardisation and comparability across data and ensure that data are delivered periodically.

(19)

The recent stress episodes in commodities markets have highlighted the importance of authorities having a comprehensive picture of the derivatives activities and exposures of non-financial counterparties that are subject to the clearing obligation. Non-financial counterparties subject to the clearing obligation that are part of a group whose intragroup transactions are exempt from the reporting obligation should have their derivatives positions reported by their Union parent undertaking on an aggregated basis. The reporting should be done on a weekly basis at entity level and should be broken down by type of derivatives. Such information should be provided to ESMA and the relevant competent authority of the individual entities in the group. It is also appropriate to consider the concerns raised by the supervisory community about the quality of the data reported by financial and non-financial counterparties pursuant to Regulation (EU) No 648/2012. Entities subject to the reporting obligation pursuant to Regulation (EU) No 648/2012 should therefore be required to exercise due diligence by establishing appropriate procedures and arrangements to ensure the quality of the data, before the data are submitted. ESMA should issue guidelines to further specify such procedures and arrangements, taking into account the possibility to apply the requirements in a proportionate manner. To ensure that the requirements on the quality of the data are fulfilled, Member States should adopt appropriate penalties where the data reported contain systematic manifest errors. ESMA should develop draft regulatory technical standards to specify what constitutes a systematic manifest error for the purposes of imposing those penalties. While entities have the possibility to delegate their reporting, they remain responsible in the event that the data being reported by the entity to which they have delegated their reporting are inaccurate or duplicative.

(20)

To ensure that competent authorities are at all times aware of exposures at entity and group level and are able to monitor such exposures, competent authorities should establish effective cooperation procedures to calculate the positions in contracts not cleared at an authorised or recognised CCP and to actively evaluate and assess the level of exposure in OTC derivative contracts at entity and group level. In order for ESMA to have an overall picture of the activity in OTC derivatives of non-financial counterparties established in the Union, as well as their parent undertakings, the authorities responsible for those non-financial counterparties and parent undertakings should report to ESMA on a regular basis. Such reporting should not replicate the information already submitted by means of other reporting requirements set out in Regulation (EU) No 648/2012, but instead provide information on the evolution of the portfolios of those non-financial counterparties between two reporting dates, as well as an assessment of the risks to which such counterparties might be exposed. Authorities responsible for non-financial counterparties that are part of a group should cooperate in order to minimise the reporting burden and assess the intensity and type of activity in OTC derivatives of those non-financial counterparties.

(21)

It is necessary to ensure that Commission Delegated Regulation (EU) No 149/2013 (12), relating to the criteria for establishing which OTC derivative contracts are objectively measurable as reducing risk, continues to be appropriate in light of market developments. It is also necessary to ensure that the clearing threshold values laid down in that Delegated Regulation properly and accurately reflect the different risks and characteristics in derivatives, other than interest rate, foreign exchange, credit and equity derivatives. ESMA should therefore also review and clarify, where appropriate, that Delegated Regulation and propose amendments if necessary. ESMA is encouraged to consider and provide, inter alia, more granularity for commodity derivatives. That granularity could be achieved by separating the clearing thresholds by sector and type, such as differentiating between agriculture, energy or metal related commodities or differentiating those commodities based on other features such as environmental, social and governance criteria, environmentally sustainable investments or crypto-related features. During the review, ESMA should endeavour to consult relevant stakeholders that have specific knowledge on particular commodities.

(22)

Non-financial counterparties that exchange collateral for OTC derivative contracts not cleared by a CCP should have sufficient time to negotiate and test the arrangements to exchange such collateral.

(23)

In order to avoid market fragmentation and ensure a level playing field, and acknowledging the fact that in some third-country jurisdictions the exchange of variation and initial margin for single stock options and equity index options is not subject to equivalent margin requirements, the treatment of such products should be exempted from the requirement to have risk-management procedures regarding the timely, accurate and appropriately segregated exchange of collateral, as long as there is insufficient international convergence on their treatment. ESMA, in cooperation with the European Supervisory Authority (European Banking Authority) (EBA) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (13) and the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA) established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (14) (known collectively as ‘ESAs’), should monitor regulatory developments in third-country jurisdictions and the development of exposures by counterparties subject to Regulation (EU) No 648/2012 in single stock options and equity index options not cleared by a CCP, and should report to the Commission on the results of such monitoring at least every three years. Where the Commission has received such a report, it should assess whether international developments have led to more convergence in the treatment of single stock options and equity index options and whether the derogation endangers the financial stability of the Union or of one or more of its Member States. In such a case, the Commission should be empowered to revoke the derogation regarding the treatment of single stock options and equity index options. In that way, it can be ensured that appropriate requirements are in place in the Union to mitigate counterparty credit risk in respect of such contracts while avoiding any scope for regulatory arbitrage.

(24)

In order to comply with the initial margin requirements set out in Regulation (EU) No 648/2012, a large number of Union market participants use industry-wide, pro forma initial margin models. Given that those models are used industry-wide, they are unlikely to be significantly modified by the preference of every single user or by the different assessments of every single competent authority that authorises the use of those models by the entities it supervises. In practice, since the same model is used by a large number of Union counterparties, the consequent need for that model to be validated by a plurality of competent authorities gives rise to a coordination problem. To address that problem, EBA should be given the task of operating as a central validator of such pro forma models. In its role as central validator, EBA should validate the elements and general aspects of those pro forma models, including their calibration, design, and coverage of instruments, assets classes, and risk factors. To assist its work, EBA should collect feedback from competent authorities, ESMA and EIOPA, and coordinate their collective views. Given that competent authorities would continue to be responsible for authorising the use of those pro forma models and for monitoring their implementation at the supervised entity level, EBA should assist competent authorities in their approval processes regarding the general aspects of the implementation of those pro forma models. In addition, EBA should serve as a single point of discussion with the industry to help ensure more effective Union coordination on the design of such models. Competent authorities will remain responsible for authorising the use of such models and for monitoring the implementation of those models at the supervised entity level.

(25)

Central banks, public bodies charged with or intervening in the management of the public debt, and public sector entities, are free to choose whether to use clearing services of CCPs to clear their derivatives contracts. Where they decide to use such services, they are encouraged to clear, in principle, through Union CCPs where the products sought are available. Given that the modalities of those entities’ participation in CCPs vary across Member States and in view of diverging practices regarding the calculation of the exposures of those entities to Union CCPs and their contribution to the financial resources of those CCPs, further harmonisation of those aspects, by means of ESMA guidelines, would be desirable.

(26)

EBA, in cooperation with ESMA and EIOPA, should draft regulatory technical standards to specify supervisory procedures ensuring the initial and ongoing validation of the risk-management procedures. To ensure proportionality, only financial counterparties that are most active in OTC derivatives not cleared by a CCP should be subject to the procedures specified in those regulatory technical standards.

(27)

To ensure a consistent and convergent approach amongst competent authorities throughout the Union, authorised CCPs or legal persons established in the Union that wish to be authorised under Regulation (EU) No 648/2012 to provide clearing services and activities in financial instruments should also be able to be authorised to provide clearing services and other activities in relation to non-financial instruments. Regulation (EU) No 648/2012 applies to CCPs as entities and not to specific services. When a CCP clears non-financial instruments in addition to financial instruments, the CCP’s competent authority should be able to ensure that the CCP is in compliance with Regulation (EU) No 648/2012 for all services it offers.

(28)

Union CCPs face challenges in expanding their product offer for clearing services and experience difficulties in bringing clearing services for new products to the market. In view of such challenges and difficulties and in line with the objective of enhancing the attractiveness of the Union’s clearing system, the process of authorising CCPs in the Union or extending the authorisation of CCPs should therefore be simplified and should include specific timelines, while ensuring the appropriate involvement of ESMA and the college of the Union CCP concerned. First, to avoid significant, and potentially indefinite, delays, an acknowledgment of the receipt of the application should be provided swiftly and the competent authorities should thereafter assess the completeness of an application for authorisation. To ensure that legal persons established in the Union that wish to be authorised as CCPs and Union CCPs wishing to extend their authorisations submit all required documents and information with their applications, ESMA should develop draft regulatory and implementing technical standards specifying which documents are to be provided, what information those documents are to contain and in which format they are to be submitted. When preparing the draft regulatory technical standards, ESMA should take into account existing documentation requirements and practices under Regulation (EU) No 648/2012 and streamline their submission where possible in order to avoid an excessive time to market and to ensure that the information to be provided by the CCP applying for an extension of authorisation is proportional to the materiality of the change for which the CCP applies, without making the overall process unduly complex, burdensome and disproportionate. Second, to ensure an efficient and concurrent assessment of applications, legal persons established in the Union that wish to be authorised as CCPs and Union CCPs wishing to extend their authorisations should be able to submit all documents via a central database. Third, a CCP’s competent authority should, during the assessment period, coordinate and submit questions from that competent authority, ESMA or the college to the legal person established in the Union that wishes to be authorised as a CCP and Union CCPs wishing to extend their authorisations, to ensure a swift, flexible, and cooperative process for a comprehensive review. To avoid duplication and unnecessary delays, all questions and subsequent clarifications should also be shared simultaneously between the CCP’s competent authority, ESMA and the college.

(29)

At present, there exists some uncertainty as to when an additional service or activity is covered by a CCP’s existing authorisation. It is necessary to address that uncertainty and to ensure proportionality when the proposed additional service or activity not covered by a CCP’s existing authorisation does not significantly increase the risks for the CCP. In such a case, the additional service or activity should not undergo the full assessment procedure, but instead benefit from an accelerated procedure. The accelerated procedure should not require a separate opinion from ESMA and the college since such a requirement would be disproportionate, but rather ESMA and the members of the college should provide input to the CCP’s competent authority on the assessment of whether the extension qualifies as falling under the accelerated procedure. In order to ensure supervisory convergence, ESMA should develop draft regulatory technical standards to further specify the conditions for the application of the accelerated procedure as well as the procedure for providing its input and the input of the college.

(30)

To alleviate the administrative burden on CCPs and competent authorities, without modifying the overall risk profile of a CCP, CCPs should be able to implement extensions of services for business-as-usual changes without an authorisation, where a CCP considers that the proposed additional service or activity would not have a material impact on its risk profile, in particular where the new clearing service or activity is very similar to the services that the CCP is already authorised to provide. To enable CCPs to swiftly implement such business-as-usual changes, CCPs should be exempted from the procedures for authorisation of the extension of activities and services in relation to such changes. CCPs should notify the competent authority and ESMA where they decide to make use of such exemption. The competent authority should review the changes implemented in the context of its annual review and evaluation process.

(31)

To ensure the consistent functioning of all colleges and to further enhance supervisory convergence, the college should be co-chaired by the national competent authority and any of the independent members of the CCP Supervisory Committee. To foster cooperation between ESMA and competent authorities, the co-chairs should jointly decide the dates of the college meetings and establish the agenda of such meetings. However, to ensure consistent decision making and that the CCP’s competent authority remains ultimately responsible, in the event of a disagreement between the co-Chairs, the final decision should, in any case, be taken by the competent authority, who should provide ESMA with a reasoned explanation of its decision.

(32)

ESMA should be able to contribute more effectively to ensuring that Union CCPs are safe, robust and competitive in providing their services throughout the Union. Therefore, ESMA should, in addition to the supervisory competences currently laid down in Regulation (EU) No 648/2012, issue an opinion to the CCP’s competent authority about a CCP’s withdrawal of authorisation except where a decision is required urgently, meaning within a period shorter than the period allocated for ESMA to provide its opinions. ESMA should also issue opinions on the review and evaluation, margin requirements and participation requirements. Competent authorities should provide explanations for any significant deviations from ESMA’s opinions and ESMA should inform its Board of Supervisors where a competent authority does not comply or does not intend to comply with ESMA’s opinion and with any conditions or recommendations included therein. The information should also include the reasons provided by the competent authority for non-compliance with ESMA’s opinion or any conditions or recommendations contained therein.

(33)

To ensure the swift and efficient sharing of information and documentation under Regulation (EU) No 648/2012, to foster greater cooperation among competent authorities involved in the supervision of entities subject to that Regulation and to simplify communication between competent authorities and their supervised entities in relation to procedures mandated under that Regulation, ESMA should establish and maintain an electronic central database. All relevant competent authorities and bodies should have access to that central database for the information pertinent to their tasks and responsibilities. Similarly, entities subject to the requirements of Regulation (EU) No 648/2012 should have access to the information and documentation they submitted and any documentation addressed to them. The central database should be used to share as much information and documentation as possible, including at least the information and documentation relating to authorisations, extensions of services and model validations.

(34)

It is necessary to ensure that CCPs comply with Regulation (EU) No 648/2012 on an ongoing basis, particularly in relation to the provision of additional clearing services or activities authorised via the accelerated procedure or exempted from authorisation as a result of the implementation of business-as-usual changes, as well as the implementation of model changes after an accelerated procedure for the validation of such a model change, as in such cases ESMA and the college do not issue separate opinions. Hence, the review conducted by the CCP’s competent authority, at least on an annual basis, should in particular consider those additional clearing services or activities and model changes. To ensure supervisory convergence and coordination between competent authorities and ESMA, and that Union CCPs are safe, robust and competitive in providing their services throughout the Union, the competent authority should, at least annually, submit its report in relation to its review and evaluation of a CCP to ESMA and the college for their opinions. ESMA’s opinion should assess the aspects covered by the competent authority’s report, which include a follow-up on the provision of services or activities by the CCP, with specific attention to accelerated procedures and business-as-usual changes, as well as the cross-border risks the CCP might be exposed to, and considering the CCP’s overall position as a clearing service provider within the Union. On-site inspections play a key role in the conduct of supervisory tasks, offering invaluable information to competent authorities. As such, they should be conducted at least once a year and, to ensure the prompt exchange of information, knowledge sharing and effective cooperation between the competent authorities and ESMA, ESMA should be informed of both planned and urgent on-site inspections, be able to request to participate in such inspections and receive any relevant information in relation to such on-site inspections, as well as a reasoned explanation for any refusal to permit ESMA to participate. In addition, to further enhance coordination between ESMA and the competent authorities, ESMA, under specific circumstances and in the context of the supervisory review and evaluation, may request an ad hoc meeting with the CCP and the competent authority concerned. The college should be informed of the outcome of such a meeting. To strengthen information sharing between the competent authorities and ESMA, the latter should also be able to request from the competent authorities the information it needs to carry out its tasks in the context of the supervisory review and evaluation.

(35)

ESMA should have the means to identify potential risks to the financial stability of the Union. ESMA should therefore, in cooperation with the ESRB, EBA, EIOPA, and the European Central Bank (ECB) in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Council Regulation (EU) No 1024/2013 (15), identify the interconnections and interdependencies between different CCPs and legal persons, including, to the extent possible, shared clearing members, clients and indirect clients, shared material service providers, shared material liquidity providers, cross-collateral arrangements, cross-default provisions and cross-CCP netting, cross-guarantee agreements and risks transfers and back-to-back trading arrangements.

(36)

The central banks of issue of the Union currencies of the financial instruments cleared by authorised CCPs that have requested membership of the CCP Supervisory Committee are non-voting members of the CCP Supervisory Committee. They only participate in its meetings for Union CCPs in the context of discussions about the Union-wide assessments of the resilience of Union CCPs to adverse market developments and relevant market developments. Contrary to their involvement in the supervision of third-country CCPs, central banks of issue are thus insufficiently involved in supervisory matters for Union CCPs that are of direct relevance to the conduct of monetary policy and the smooth operation of payments systems, which leads to insufficient consideration of cross-border risks. It is therefore appropriate that those central banks of issue are able to attend as non-voting members all meetings of the CCP Supervisory Committee when it convenes for Union CCPs.

(37)

To enhance the ability of Union bodies to have a comprehensive overview of market developments relevant for clearing in the Union, to monitor the implementation of certain clearing related requirements of Regulation (EU) No 648/2012 and to collectively discuss the potential risks arising from the interconnectedness of different financial actors and other issues related to the financial stability, it is necessary to establish a cross-sectoral monitoring mechanism bringing together the relevant Union bodies involved in the supervision of Union CCPs, clearing members and clients (Joint Monitoring Mechanism). The Joint Monitoring Mechanism should be managed and chaired by ESMA as the authority involved in the supervision of Union CCPs and supervising systemically important third-country CCPs. Other participants should include representatives of the Commission, EBA, EIOPA, the ESRB, the central banks of issue of the currencies in which the contracts belonging to clearing services of substantial systemic importance are denominated, national competent authorities, and the ECB in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Regulation (EU) No 1024/2013.

(38)

To inform future policy decisions, ESMA, in cooperation with the other participants in the Joint Monitoring Mechanism, should submit an annual report to the European Parliament, the Council and the Commission on the results of their activities. ESMA can institute a breach of Union law procedure pursuant to Regulation (EU) No 1095/2010 where, on the basis of the information received as part of the Joint Monitoring Mechanism and following the discussions held therein, ESMA considers that competent authorities fail to ensure clearing members’ and clients’ compliance with the requirement to clear at least a defined number of identified contracts at accounts at Union CCPs, or where ESMA identifies a risk to the financial stability of the Union due to an alleged breach or non-application of Union law. Before instituting such a breach of Union law procedure, ESMA can issue guidelines and recommendations pursuant to Article 16 of Regulation (EU) No 1095/2010. Where, on the basis of the information received as part of the Joint Monitoring Mechanism and following the discussions held therein, ESMA considers that compliance with the requirement to clear at least a defined number of identified contracts at accounts at Union CCPs does not effectively ensure the reduction of Union clearing members’ and clients’ excessive exposure to Tier 2 CCPs, it should review and propose amending the relevant Commission delegated act specifying further that requirement and proposing to set, where necessary, an appropriate adaptation period.

(39)

The 2020 market turmoil as a result of the COVID-19 pandemic and the 2022 high prices on energy wholesale markets following Russia’s unprovoked and unjustified war of aggression against Ukraine showed that, while it is essential for competent authorities to cooperate and exchange information to address ensuing risks when events with a cross-border impact emerge, ESMA still lacks the necessary tools to ensure such coordination and a convergent approach at Union level. ESMA should therefore be empowered to act in an emergency situation at one or more CCPs that has or is likely to have destabilising effects on cross-border markets. In such emergency situations, ESMA should be entrusted with a coordination role between competent authorities, colleges and resolution authorities in order to build a coordinated response. ESMA should be able to convene meetings of the CCP Supervisory Committee, either on its own initiative or upon request, potentially with an enlarged composition, to coordinate effectively competent authorities’ responses in emergency situations. ESMA should also be able to request information from relevant competent authorities where necessary for ESMA to perform its coordination function in those situations and for ESMA to be able to issue recommendations to the competent authority, and ESMA should be able to request such information directly from the CCP or market participants where the competent authority does not provide answers within the appropriate timeframe. The role of ESMA in emergency situations should be without prejudice to the final responsibility of the CCP’s competent authority to take supervisory decisions in respect of the CCP it supervises, including emergency measures. It is also essential that college members are able to forward the information they receive in an emergency situation to the public bodies, including ministries, responsible for the financial stability of their markets.

(40)

To reduce the burden on CCPs and ESMA, it should be clarified that where ESMA undertakes a review of a third-country CCP’s recognition, that third-country CCP should not be obliged to submit a new application for recognition. It should, however, provide ESMA with all information necessary for such review. Consequently, ESMA’s review of a third-country CCP’s recognition should not be treated as a new recognition of that third-country CCP.

(41)

The Commission should be able, when adopting an equivalence decision, to waive the requirement for that third country to have an effective equivalent system for the recognition of third-country CCPs. In considering whether such an approach would be proportionate, the Commission might consider a range of different factors, including compliance with the Principles for financial market infrastructures published by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions, the size of the third-country CCPs established in that jurisdiction and, where known, the expected activity in those third-country CCPs by clearing members and trading venues established in the Union.

(42)

To ensure that cooperation arrangements between ESMA and the relevant competent authorities of third countries are proportionate, such arrangements should take into consideration a range of different aspects, including the categorisation of third-country CCPs as Tier 1 or Tier 2 CCPs, the specific features of the scope of services provided, or intended to be provided, within the Union, whether those services entail specific risks to the Union or to one or more of its Member States, as well as adherence of the third-country CCPs to international standards. The cooperation arrangements between ESMA and the relevant competent authorities of third countries should therefore reflect the degree of risk that CCPs established in a third country potentially present to the financial stability of the Union or of one or more of its Member States.

(43)

ESMA should therefore tailor its cooperation arrangements to different third-country jurisdictions based on the CCPs established in a given jurisdiction. In particular, Tier 1 CCPs cover a wide range of CCP profiles so ESMA should ensure that a cooperation arrangement is proportionate to the CCPs established in each third-country jurisdiction. More specifically, ESMA should consider, amongst others, the liquidity of the markets concerned, the degree to which CCPs’ clearing activities are denominated in euro or other Union currencies and the extent to which Union entities use the services of such CCPs. Considering that the vast majority of Tier 1 CCPs provide clearing services to a limited extent to clearing members and trading venues established in the Union and might clear products that are not within the scope of Regulation (EU) No 648/2012, ESMA’s scope of assessment and information to be requested should also be limited in all of those jurisdictions. To limit information requests for Tier 1 CCPs, a pre-defined range of information should in principle be requested by ESMA annually. Where the risks from a Tier 1 CCP or jurisdiction are potentially greater, additional requests, at least on quarterly basis, and a wider scope of information requested would be justified. Cooperation arrangements should be tailored to reflect such a differentiation in the risk profile of different Tier 1 CCPs and should include provisions that organise an appropriate framework for the exchange of information. However, any cooperation arrangements in place when this Regulation enters into force should not be required to be adjusted unless the relevant third-country authorities so request.

(44)

Where a CCP is recognised as a Tier 2 CCP under Article 25(2b) of Regulation (EU) No 648/2012, considering that those CCPs are of systemic importance for the Union or for one or more of its Member States, the cooperation arrangements between ESMA and the relevant third-country authorities should cover the exchange of information for a broader range of information and with increased frequency. In that case, the cooperation arrangements should also entail procedures to ensure that such a Tier 2 CCP is supervised pursuant to Article 25 of that Regulation. ESMA should ensure it can obtain all information necessary to fulfil its duties under Regulation (EU) No 648/2012, including information necessary to ensure compliance with Article 25(2b) of that Regulation and to ensure that information is shared where a CCP has been granted, partially or fully, comparable compliance. To enable ESMA to carry out full and effective supervision of Tier 2 CCPs, it should be clarified that those CCPs are to provide ESMA with information periodically.

(45)

ESMA should also, where comparable compliance is granted, regularly assess the continued compliance by Tier 2 CCPs with the conditions for their recognition through comparable compliance, by monitoring CCPs’ compliance with the requirements set out in Article 16 and Titles IV and V under Commission Delegated Regulation (EU) 2020/1304 (16). In undertaking that assessment, ESMA should, in addition to receiving the relevant information and confirmations from the Tier 2 CCPs, cooperate and agree on administrative procedures with the third-country authority to ensure that ESMA has the relevant information to monitor that the conditions for comparable compliance are complied with and, to the extent possible, reduce the administrative and regulatory burden for those Tier 2 CCPs.

(46)

To ensure that ESMA is also informed about how a Tier 2 CCP is prepared for and can mitigate and recover from financial distress, the cooperation arrangements should include the right for ESMA to be consulted in the preparation and assessment of recovery plans and in the preparation of resolution plans, as well as the right for ESMA to be informed where a Tier 2 CCP establishes a recovery plan or where a third-country authority establishes resolution plans. ESMA should also be informed of the aspects relevant for the financial stability of the Union, or of one or more of its Member States, and on how individual clearing members and, to the extent known, clients and indirect clients, could be materially affected by the implementation of such recovery plans or resolution plans. The cooperation arrangements should also specify that ESMA is to be informed when a Tier 2 CCP intends to activate its recovery plan or where the third-country authorities have determined that there are indications of an emerging crisis situation that could affect the operations of the CCP, its ability to provide clearing services, or where the third-country authorities envisage taking a resolution action in the near future.

(47)

ESMA should be able to withdraw the recognition of a third-country CCP where that third-country CCP has seriously and systematically infringed any of the applicable requirements laid down in Regulation (EU) No 648/2012, including the submission to ESMA of information pertaining to the recognition of that third-country CCP, the payment of fees to ESMA or the answer to ESMA’s requests for information necessary for ESMA to carry out its duties in respect of third-country CCPs, and has not taken the remedial action requested by ESMA within an appropriately set timeframe.

(48)

To mitigate potential risks for the financial stability of the Union, CCPs and clearing houses should not be able to be clearing members of other CCPs nor should CCPs be able to accept other CCPs or clearing houses as clearing members or indirect clearing members. Market participants currently operating under such arrangements should be required to find other ways to centrally clear. Such a prohibition should not impact interoperability arrangements, which are regulated under Title V of Regulation (EU) No 648/2012 and arrangements entered into for the purpose of a CCP undertaking its investment policy in accordance with that Regulation, such as sponsored memberships or direct access to cleared repo markets between CCPs. To provide sufficient time for adaptation, existing arrangements should be phased out within two years from the date of entry into force of this Regulation. Market participants and authorities should explore different solutions, including setting up interoperability arrangements.

(49)

Regulation (EU) No 648/2012 should apply to interoperability arrangements for all types of financial and non-financial instruments, such as derivative contracts, in addition to money-market instruments and transferable securities as defined in Directive 2014/65/EU of the European Parliament and of the Council (17). ESMA, after consulting the members of the ESCB and the ESRB, should therefore develop draft regulatory technical standards to ensure consistent, efficient and effective assessments of interoperability arrangements.

(50)

To ensure the supervisory framework for Union CCPs results in safe and resilient CCPs, and is built on cooperation between the CCP’s competent authority and ESMA, the results of independent audits should be communicated to the board of the CCP and also be made available to ESMA and the CCP’s competent authority. In addition, both ESMA and the CCP’s competent authority should be able to request to attend the CCP’s risk committee meetings in a non-voting capacity and be informed of the activities and decisions of that risk committee. ESMA should also promptly receive any decisions in which the board of the CCP decides not to follow the advice of the risk committee, as well as the CCP’s explanation for such decisions.

(51)

Recent events of extreme volatility on commodity markets illustrate the fact that non-financial counterparties do not have the same access to liquidity as financial counterparties. Therefore, non-financial counterparties should only be allowed to offer client clearing services to non-financial counterparties belonging to the same group. Where a CCP has accepted or intends to accept non-financial counterparties as clearing members, that CCP should ensure that non-financial counterparties are able to demonstrate that they can fulfil the margin requirements and provide default funds contributions, including in stressed conditions. Given that non-financial counterparties are not subject to the same prudential requirements and liquidity safeguards as financial counterparties, direct access of non-financial counterparties to CCPs should be monitored by the competent authorities of CCPs accepting them as clearing members. The competent authority of the CCP should report to ESMA and the college on a regular basis on the products cleared by non-financial counterparties, the overall exposure and any identified risks. This Regulation does not aim to restrict the ability of non-financial counterparties to become direct clearing members of a CCP in a prudentially sound manner.

(52)

To ensure that clients and indirect clients have better visibility and predictability of margin calls, and thus further develop their liquidity management strategies, clearing members and clients providing clearing services should ensure transparency towards their clients. Due to their provision of clearing services and their professional experience with central clearing and liquidity management, clearing members are best placed to communicate in a clear and transparent manner to clients how margin models work, including in stress events, and the implications such events can have on the margins clients are requested to post, including any additional margin clearing members themselves might request from their clients. A better understanding of margin models can improve clients’ ability to reasonably predict margin calls and prepare themselves for collateral requests, particularly in stress events. In order to ensure that clearing members are able to provide effectively the required levels of transparency on margin calls and CCP margin models to their clients, CCPs should also provide them with the information needed. ESMA, in consultation with EBA and the ESCB, should further specify the scope and format of the exchange of information between CCPs and clearing members and between clearing members and their clients.

(53)

To ensure that margin models reflect current market conditions, CCPs should not only regularly but also continuously revise the level of their margins taking into account any potentially procyclical effects of such revisions. When calling and collecting margins on an intraday basis, CCPs should further consider the potential impact of their intraday margin collections and payments on the liquidity positions of their participants.

(54)

To ensure that liquidity risk is accurately defined, the entities whose default a CCP should take into account when determining such risk should be expanded to cover not only the liquidity risk generated by the default of clearing members but also of liquidity providers, excluding central banks.

(55)

To facilitate access to clearing by non-financial entities that do not hold sufficient amounts of highly liquid assets, in particular energy companies under conditions to be specified by ESMA, and to ensure that a CCP takes those conditions into account when calculating its overall exposure to a bank that is also a clearing member, public bank guarantees and commercial bank guarantees should be considered eligible collateral. When specifying the conditions under which those guarantees may be accepted as collateral, ESMA should allow the CCP to decide the level of collateralisation of those guarantees based on its risk assessment, including the possibility for those guarantees to be uncollateralised, subject to appropriate concentration limits, credit quality requirements and stringent wrong-way risk requirements. In addition, given their low credit risk profile, it should be specified that public guarantees are also eligible as collateral. Finally, a CCP should, when revising the level of the haircuts it applies to the assets it accepts as collateral, take into account any potential procyclical effects of such revisions.

(56)

To facilitate the transfer of a client’s positions in the event of a clearing member default, the clearing member that receives such positions should be given time to comply with certain requirements that come with the provision of client clearing services. In particular, and considering that the transfer of the client’s positions takes place under extraordinary circumstances and over a short period, the receiving clearing member should be given three months to undertake and complete its due diligence processes to ensure compliance with anti-money laundering requirements under Union law. In addition, and if applicable, the receiving clearing member should comply with capital requirements for exposures of clearing members towards clients under Regulation (EU) No 575/2013 within a period agreed with its competent authority not exceeding three months. The starting point of that agreed period should be the date of transfer of the client’s positions from the defaulting clearing member to the receiving clearing member.

(57)

In relation to the validation of changes to the models and parameters of CCPs, amendments should be introduced to simplify the process in order to facilitate CCPs’ ability to respond promptly to market developments that may require amendments to their risk models and parameters. To ensure supervisory convergence, Regulation (EU) No 648/2012 should specify the conditions to be considered when assessing whether a given change is significant and ESMA, in close cooperation with the ESCB, is requested to further refine such conditions by defining quantitative thresholds and specific elements to be considered. In particular, ESMA should specify the criteria for changes that should be considered significant, including which structural elements of risk models should be included within the scope of changes that are considered significant. Those structural elements of risk models should include, for example, the anti-procyclicality tools implemented by CCPs. All significant changes should be subject to full validation before their adoption. Where a CCP applies and uses a previously validated model or applies only minor changes to it, such as adjusting the parameters within an approved range that is part of the validated model due to external factors such as changes to prices in the market, it should not be considered a change to the model and therefore it does not need to be validated.

(58)

Non-significant changes to models and parameters that do not increase the risks for a Union CCP should be able to be approved swiftly. Therefore, in line with the objective of having safe and resilient Union CCPs while building a modern and competitive Union clearing ecosystem able to attract business, an accelerated procedure for non-significant changes to models and parameters should be introduced in order to limit the challenges and uncertainty that currently exist in the supervisory validation procedure of such changes. Where a change is not significant, an accelerated validation procedure should apply. Such a procedure is intended to facilitate CCPs’ ability to respond promptly to market developments that might require amendments to their risk models and parameters. Therefore, the procedure for the validation of such changes to risk models and parameters should be simplified.

(59)

Regulation (EU) No 648/2012 should be reviewed no later than five years after the date of entry into force of this amending Regulation, in order to allow sufficient time to apply the changes introduced by this amending Regulation. While a review of Regulation (EU) No 648/2012 in its entirety should be carried out, that review should focus on the effectiveness and efficiency of that Regulation in meeting its aims, improving the efficiency and safety of Union clearing markets and preserving the financial stability of the Union. The review should also consider the attractiveness of Union CCPs, the impact of this amending Regulation on encouraging clearing in the Union, and the extent to which the enhanced assessment and management of cross-border risks have benefited the Union.

(60)

To ensure consistency between Regulation (EU) 2017/1131 of the European Parliament and of the Council (18) and Regulation (EU) No 648/2012 and to preserve the integrity and stability of the internal market, it is necessary to lay down in Regulation (EU) 2017/1131 a uniform set of rules to address counterparty risk in financial derivative transactions performed by money market funds, where the transactions have been cleared by an authorised or recognised CCP. As central clearing arrangements mitigate counterparty risk that is inherent in financial derivative contracts, it is necessary to take into consideration whether a derivative has been centrally cleared by an authorised or recognised CCP when determining the applicable counterparty risk limits. It is also necessary for regulatory and harmonisation purposes to lift counterparty risk limits only where the counterparties use authorised or recognised CCPs to provide clearing services to clearing members and their clients.

(61)

In order to ensure consistent harmonisation of rules introduced by this Regulation, technical standards should be developed. The Commission should be empowered to adopt regulatory technical standards developed by ESMA with regard to further specifying the following: the value of the clearing thresholds applicable to aggregate positions; the elements and requirements of a PTRR exercise and for a PTRR service provider; the operational and representativeness criteria for the active account requirement; the details of the relevant reporting; the type of fees and other costs that should be disclosed to clients when providing clearing services; the content of information to be reported and the level of detail of that information for third-country CCPs recognised under Regulation (EU) No 648/2012; the details and content of the information to be provided by CCPs established in the Union; the scope and details of the reporting by Union clearing members and clients to their competent authorities on their clearing activity in third-country CCPs and while providing the mechanisms triggering a review of the values of the clearing thresholds following significant price fluctuations in the underlying class of OTC derivatives to also review the scope of the hedging exemption and thresholds for the clearing obligation to apply; systematic manifest errors of the reporting; the documents and information that CCPs are required to submit when applying for authorisation or for an extension of authorisation; the type of extension that would not have a material impact on a CCP’s risk profile and the notification frequency for the use of the exemption; the conditions to determine whether the accelerated procedure for an extension of authorisation applies and the procedure for seeking input from ESMA and the college; the elements to be considered when laying down the admission criteria of a CCP and when assessing the ability of non-financial counterparties to meet the relevant requirements; transparency requirements; collateral requirements; the aspects of model validation; and the requirements for CCPs to adequately manage the risks arising from interoperability arrangements. The Commission should adopt those regulatory technical standards by means of delegated acts pursuant to Article 290 of the Treaty on the Functioning of the European Union (TFEU) and in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

(62)

In order to ensure uniform conditions for the implementation of this Regulation, the Commission should also be empowered to adopt implementing technical standards developed by ESMA with regard to format of the reporting by Union clearing members and clients to their competent authorities on their clearing activity in third-country CCPs recognised under Regulation (EU) No 648/2012, the data standards and formats for the reporting of information of Union CCPs to ESMA, the format of the required documents for applications for an authorisation, for extension of the authorisation and for the validation of changes to models and parameters. The Commission should adopt those implementing technical standards by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1095/2010.

(63)

In order to ensure the objectives of this Regulation, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (19). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(64)

Since the objectives of this Regulation, namely to increase the safety and efficiency of Union CCPs by improving their attractiveness, encouraging clearing in the Union and enhancing the cross-border consideration of risks, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale and effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(65)

Regulations (EU) No 648/2012, (EU) No 575/2013 and (EU) 2017/1131 should therefore be amended accordingly,

(1)

in Article 1, paragraph 3 is deleted;

(2)

Article 3 is replaced by the following:

(*1)  Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19)."

(*2)  Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council (OJ L 340, 22.12.2007, p. 66)."

(*3)  Regulation (EU) 2024/1624 of the European Parliament and of the Council of 31 May 2024 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (OJ L, 2024/1624, 19.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1624/oj).’;"

(3)

in Article 4(1), the following subparagraph is added:

‘The obligation to clear all OTC derivative contracts shall not apply to contracts concluded in the situations referred to in the first subparagraph, point (a)(iv), between, on the one side, a financial counterparty that meets the conditions set out in Article 4a(1), second subparagraph, or a non-financial counterparty that meets the conditions set out in Article 10(1), second subparagraph, and, on the other side, a pension scheme arrangement that is established in a third country and that operates on a national basis, provided that it is authorised, supervised and recognised under national law, and where its primary purpose is to provide retirement benefits and it is exempted from the clearing obligation under that national law.’

(4)

Article 4a is replaced by the following:

(5)

the following article is inserted:

(6)

in Article 6(2), the following point is added:

;

(7)

the following articles are inserted:

(8)

Article 9 is amended as follows:

(9)

Article 10 is amended as follows:

(10)

Article 11 is amended as follows:

(11)

Article 12 is amended as follows:

(12)

Article 13 is replaced by the following:

(13)

Article 14 is amended as follows:

(14)

Article 15 is amended as follows:

(15)

the following article is inserted:

(16)

Article 17 is amended as follows:

(17)

the following articles are inserted:

(18)

Article 18 is amended as follows:

(19)

Article 19 is amended as follows:

(20)

Article 20 is replaced by the following:

(21)

in Article 21, paragraphs 1 to 4 are replaced by the following:

(22)

Article 23a is replaced by the following:

(23)

the following article is inserted:

(24)

Article 24 is replaced by the following:

(*4)  Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).’;"

(25)

Article 24a is amended as follows:

(26)

in Article 24b, paragraphs 1 and 2 are replaced by the following:

(27)

Article 25 is amended as follows:

(28)

in Article 25a, paragraph 2 is replaced by the following:

(29)

in Article 25b(1), the second subparagraph is replaced by the following:

‘ESMA shall require from each Tier 2 CCP all of the following:

(30)

in Article 25f, paragraph 1 is replaced by the following:

(31)

Article 25o is replaced by the following:

(32)

Article 25p is amended as follows:

(33)

Article 26 is amended as follows:

(34)

in Article 27, the following paragraph is inserted:

(35)

Article 28 is amended as follows:

(36)

Article 30 is replaced by the following:

(37)

Article 31 is amended as follows:

(38)

in Article 32(1), the fourth subparagraph is replaced by the following:

‘The assessment of the competent authority concerning the notification provided for in Article 31(2) and the information referred to in Article 31(3), shall be subject to an opinion of the college referred to in Article 18 pursuant to Article 19 and an opinion of ESMA pursuant to Article 24a(7), first subparagraph, point (bc), issued in accordance with the procedure set out in Article 17b.’

(39)

Article 35 is amended as follows:

(40)

Article 37 is amended as follows:

(41)

Article 38 is replaced by the following:

(42)

in Article 40, the following paragraph is added:

‘Without prejudice to Article 1(4) and (5), and with the objective of facilitating central clearing by public sector entities, ESMA shall, by 25 June 2026, issue guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 specifying the method to be used by CCPs authorised under Article 14 of this Regulation for the calculation of exposures and of the contributions, if any, to the financial resources of CCPs by public sector entities participating in such CCPs, duly taking account of the mandate of public sector entities.’

(43)

in Article 41, paragraphs 1, 2 and 3 are replaced by the following:

(44)

in Article 44(1), the second subparagraph is replaced by the following:

‘A CCP shall measure, on a daily basis, its potential liquidity needs. It shall take into account the liquidity risk generated by the default of at least the two entities to which it has the largest exposures and which are clearing members or liquidity providers, excluding central banks.’

(45)

Article 46 is amended as follows:

(46)

Article 48 is amended as follows:

(47)

Article 49 is amended as follows:

(48)

the following article is inserted:

(49)

Article 54 is amended as follows:

(50)

in Article 81(3), first subparagraph, the following point is added:

;

(51)

Article 82 is amended as follows:

(52)

Article 85 is amended as follows;

(53)

in Article 89 the following paragraphs are added:

(54)

Article 90 is replaced by the following:

(55)

Annex III is amended as follows:

(1)

paragraph 4 is amended as follows:

(2)

the following paragraph is inserted:

(1)

in Article 2, the following point is added:

(*8)  Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).’;"

(2)

in Article 14, point (d) is replaced by the following:

;

(3)

Article 17 is amended as follows: