Mon. Mar 27th, 2023

Brussels, 8 June 2022

The European Commission has today adopted three decisions determining that the legal and supervisory frameworks for central counterparties (CCPs) in Chile, Malaysia and Indonesia are equivalent to the requirements applicable under the European Market Infrastructure Regulation (EMIR).

Today’s decisions allow Chilean, Malaysian and Indonesian CCPs (those supervised by the Indonesia Financial Services Authority) to apply for recognition by the European Securities and Markets Authority (ESMA). Once recognized, such CCPs will be able to provide central clearing services in the EU to EU clearing members and trading venues.

In addition, the Commission amended today the existing equivalence decisions for CCPs from South Africa and India. These amendments were required because there have been certain changes to the legal and supervisory frameworks in both jurisdictions since the Commission’s initial decisions. This allows for the continuation of the recognition of CCPs from both countries.

These decisions and the amended decisions are in the EU’s interest. They will facilitate EU clearing members’ access to these foreign CCPs and to clearing products denominated in local currencies. If these equivalence and recognition decisions are not taken, EU banks will be faced with higher costs. CCPs are bodies that operate between the buyer and seller of a derivative contract, becoming the buyer to every seller and the seller to every buyer. Their use was encouraged by the G20 following the financial crisis, to reduce risk in derivatives trading. Derivatives markets are global in nature.

The European Market Infrastructure Regulation (EMIR) provides a framework for the recognition of non-EU central counterparties. That framework ensures that non-EU CCPs that comply with requirements that are equivalent to those laid down in EMIR may offer central clearing services in the European Union. To ensure that its equivalence decisions remain adequate, the Commission reviews them where necessary.

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