(1)

Commission Delegated Regulations (EU) 2015/2205 (2), (EU) 2016/592 (3) and (EU) 2016/1178 (4) specify, among others, the effective dates of the clearing obligation for contracts pertaining to the classes of OTC derivatives set out in the Annexes to those Regulations. Those Regulations laid down deferred dates of application of the clearing obligation for OTC derivative contracts concluded between counterparties which are part of the same group and where one counterparty is established in a third country and the other counterparty is established in the Union. Those deferred dates were necessary to ensure that such OTC derivate contracts were not subject to the clearing obligation before the adoption of an implementing act pursuant to Article 13(2) of Regulation (EU) No 648/2012.

(2)

Since 2018, no implementing act pursuant to Article 13(2) of Regulation (EU) No 648/2012 has been adopted in relation to the clearing obligation. The application of the clearing obligation for OTC derivative contracts concluded between counterparties which are part of the same group and where one counterparty is established in a third country and the other counterparty is established in the Union has therefore been deferred by Commission Delegated Regulation (EU) 2019/667 (5), either until 21 December 2020 or until the adoption of those implementing acts. Despite the efforts invested to analyse third-country jurisdictions in relation to which any such implementing act may be warranted, no implementing act pursuant to Article 13(2) of Regulation (EU) No 648/2012 has yet been adopted in relation to the clearing obligation. The application of the clearing obligation to those contracts should therefore be further deferred to avoid the unintended detrimental economic impact that the expiry of that exemption would have on Union firms.

(3)

The United Kingdom became a third country on 1 February 2020 and Union law will cease to apply to and in the United Kingdom on 31 December 2020. The clearing obligation laid down in Regulation (EU) No 648/2012 does not however take into account the eventuality of a Member State withdrawing from the Union. Delegated Regulations (EU) 2015/2205, (EU) 2016/592 and (EU) 2016/1178 specify the dates from which the clearing obligation is to take effect for contracts pertaining to certain classes of OTC derivatives. In addition, those Regulations provide for different dates depending on the category of counterparty to those contracts. Counterparties cannot predict what the status of a counterparty established in the United Kingdom might become or to what extent that counterparty would be able to continue providing certain services to counterparties established in the Union. The challenges faced by the parties to an OTC derivative contract whose counterparties are established in the United Kingdom are therefore a direct consequence of an event that is beyond their control and may put them at a disadvantage compared to other counterparties in the Union.

(4)

To address that situation, counterparties may want to novate the contract by replacing the counterparty established in the United Kingdom with a counterparty in a Member State. If, due to the withdrawal of the United Kingdom from the Union, it is decided to replace the counterparty established in the United Kingdom with a new counterparty established in the Union, the replacement may trigger the clearing obligation if it occurs on or after the date from which the clearing obligation takes effect for that type of contract. As a result, the parties may have to clear that contract in an authorised or recognised CCP. Since centrally cleared contracts are subject to a different collateral regime than non-centrally cleared contracts, the triggering of the clearing obligation could force certain counterparties to discontinue their transactions, leaving certain risks unhedged. In order to ensure the smooth functioning of the market and a level playing field between counterparties established in the Union, counterparties should be able to replace counterparties established in the United Kingdom with counterparties established in a Member State without triggering the clearing obligation.

(5)

In addition, counterparties should be given sufficient time to replace their counterparties established in the United Kingdom. The date from which the clearing obligation may be triggered for the novation of those contracts should therefore be deferred.

(6)

Regulation (EU) No 648/2012 has been amended by Regulation (EU) 2019/834 of the European Parliament and of the Council (6). Due to that amendment, it is no longer required to clear certain OTC derivative contracts concluded before the clearing obligation takes effect. It is neither any longer required to specify the minimum remaining maturities of the OTC derivative contracts referred to in Article 4 of Regulation (EU) No 648/2012. Therefore, Delegated Regulations (EU) 2015/2205, (EU) 2016/592 and (EU) 2016/1178 should no longer specify minimum remaining maturities.

(7)

Delegated Regulations (EU) 2015/2205, (EU) 2016/592 and (EU) 2016/1178 should be amended accordingly.

(8)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority.

(9)

The amendments to Delegated Regulations (EU) 2015/2205, (EU) 2016/592 and (EU) 2016/1178 are limited adjustments of the existing regulatory framework. Given the limited scope of the amendments and the urgency of the matter, it would be highly disproportionate for ESMA to conduct open public consultations or analyses of the potential related costs and benefits. For the same reasons ESMA has not consulted the Securities and Markets Stakeholder Group established by Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (7) of which it was informed accordingly.

(10)

It is necessary to provide market participants legal certainty as quickly as possible so that they can adequately prepare for complying with the requirements under Regulation (EU) No 648/2012, the application of which will be affected by this Regulation, in particular with respect to the requirements for which the current applicable deadline is approaching rapidly. This Regulation should therefore enter into force as a matter of urgency,