http://www.legislation.gov.uk/eur/2017/581/bodyCommission Delegated Regulation (EU) 2017/581 of 24 June 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards on clearing access in respect of trading venues and central counterparties (Text with EEA relevance)Commission Delegated Regulation (EU) 2017/581Commission Delegated Regulation (EU) 2017/581 of 24 June 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards on clearing access in respect of trading venues and central counterparties (Text with EEA relevance)King's Printer of Acts of Parliamenthttps://webarchive.nationalarchives.gov.uk/eu-exit/https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017R0581texttext/xmlen2024-07-09Expert Participation2023-07-11 CHAPTER I <Strong>NON-DISCRIMINATORY ACCESS TO CCPs AND TRADING VENUES</Strong> SECTION 1 <Strong> <Emphasis>Non-discriminatory access to CCPs</Emphasis> </Strong> Conditions on the denial of access by a CCP Article 1 1 A CCP shall assess whether granting access would create any of the risks specified in Articles 2, 3 and 4 and may deny access only if, after making all reasonable efforts to manage its risks, the CCP concludes that there are significant undue risks that cannot be managed. 2 If a CCP denies access, it shall identify which risks specified in Articles 2, 3 and 4 would result from granting access and explain why those risks cannot be managed. Denial of access by a CCP based on the anticipated volume of transactions Article 2 A CCP may deny an access request on grounds of the anticipated volume of transactions arising from such access only where this would result in one of the following: the scalable design of the CCP being exceeded to such an extent that the CCP cannot adapt its systems so as to deal with the anticipated volume of transactions; the planned capacity of the CCP being exceeded in a way that the CCP would not be able to acquire the required extra capacity to clear the anticipated volume of transactions. Denial of access by a CCP based on operational risk and complexity Article 3 A CCP may deny an access request on grounds of operational risk and complexity. Operational risks and complexity shall include any of the following: incompatibility of CCP and trading venue IT systems impeding the CCP to provide for connectivity between the systems; lack of human resources with the necessary knowledge, skills and experience to perform the CCP's functions regarding the risk stemming from additional financial instruments where these differ from financial instruments already cleared by the CCP or inability to deploy such human resources. Denial of access by a CCP based on other factors creating significant undue risks Article 4 1 A CCP may deny an access request on grounds of significant undue risks where any of the following conditions are met: a the CCP does not offer clearing services in respect of the financial instruments for which access is being requested and would not be able with reasonable efforts to launch a clearing service consistent with the requirements set out in Titles II, III and IV of Regulation (EU) No 648/2012; b granting access would threaten the economic viability of the CCP or its ability to meet minimum capital requirements under Article 16 of Regulation (EU) No 648/2012; c there are legal risks; d there is an incompatibility of CCP rules and trading venue rules that the CCP cannot remedy in cooperation with the trading venue. 2 A CCP may refuse an access request based on legal risk as referred to in point (c) of paragraph 1, where as a result of granting access, the CCP would not be able to enforce its rules relating to close out netting and default procedures or would not be able to manage the risks arising from the simultaneous use of different trade acceptance models. SECTION 2 <Strong> <Emphasis>Non-discriminatory access to trading venues</Emphasis> </Strong> Conditions on the denial of access by a trading venue Article 5 1 A trading venue shall assess whether granting access would create any of the risks specified in Articles 6 and 7 and may deny access only if, after making all reasonable efforts to manage its risks, the trading venue concludes that there are significant undue risks that cannot be managed. 2 If a trading venue denies access, it shall identify which risks specified in Articles 6 and 7 would result from granting access and why those risks cannot be managed. Denial of access by a trading venue based on operational risk and complexity Article 6 A trading venue may deny an access request on grounds of operational risk and complexity arising from such access only if there is a risk of incompatibility of CCP IT systems and trading venue IT systems, impeding the trading venue to provide for connectivity between those systems. Denial of access by a trading venue based on other factors creating significant undue risks Article 7 A trading venue may deny an access request on grounds of significant undue risks in any of the following cases: threat to the economic viability of the trading venue or its ability to meet minimum capital requirements under Article 47(1)(f) of Directive 2014/65/EU of the European Parliament and of the Council; incompatibility of trading venue rules and CCP rules that the trading venue cannot remedy in cooperation with the CCP. Conditions under which access is deemed to threaten the smooth and orderly functioning of markets or adversely affect systemic risk Article 8 In addition to liquidity fragmentation, as defined in Article 2(1)(45) of Regulation (EU) No 600/2014, for the purposes of Articles 35(4)(b) and 36(4)(b) of that Regulation, granting access shall be deemed to threaten the smooth and orderly functioning of the markets, or adversely affect systemic risk, where the competent authority can provide reasons for the denial, including evidence that the risk management procedures of one or both of the parties to the access request are insufficient to prevent the granting of access from creating significant undue risks to third parties, and there is no remedial action that would sufficiently mitigate those risks. CHAPTER II <Strong>CONDITIONS UNDER WHICH ACCESS MUST BE PERMITTED</Strong> Conditions under which access must be permitted Article 9 1 The parties shall agree on their respective rights and obligations arising from the access granted, including the applicable law governing their relationships. The terms of the access agreement shall: a be clearly defined, transparent, valid and enforceable; b where two or more CCPs have access to the trading venue specify the way in which transactions on the trading venue will be allocated to the CCP that is party to the agreement; c contain clear rules concerning the moment of entry of transfer orders, construed pursuant to Directive 98/26/EC of the European Parliament and of the Council, into relevant systems and the moment of irrevocability; d contain rules regarding the termination of the access agreement by any of the parties, which shall: provide for termination in an orderly manner that does not unduly expose other entities to additional risks, including clear and transparent arrangements for the management and orderly run-off of contracts and positions made under the access agreement that were open at the point of termination; ensure that the relevant party is given a reasonable amount of time to remedy any breach that does not give rise to immediate termination; allow the termination, if risks increase in a way that would have justified denial of access in the first instance; e specify the financial instruments being subject to the access agreement; f specify the cover of the one-off and ongoing costs caused by the access request; g contain provisions for claims and liabilities stemming from the access agreement. 2 The terms of the access agreement shall require that the parties to the agreement put in place adequate policies, procedures and systems to ensure the following: a timely, reliable and secure communication between the parties; b prior consultation to the other party where changes to either party's operations are likely to have a material impact on the access agreement or on the risks to which the other party is exposed; c timely notification to the other party before a change is implemented, in the cases not covered by point (b); d resolution of disputes; e identification, monitoring and management of the potential risks arising from the access agreement; f reception by the trading venue of all necessary information to fulfil its obligations regarding the monitoring of open interest; g acceptance by the CCP of delivery of physically settled commodities. 3 The relevant parties to the access agreement shall ensure the following: a that proper risk management standards are maintained when granting access; b that information provided in the request for access is kept up-to-date throughout the duration of the access agreement, including information about material changes; c that non-public and commercially sensitive information including information provided during the development phase of a financial instrument may only be used for the specific purpose for which it is conveyed and may only be acted upon for the specific purpose agreed by the parties. Non-discriminatory and transparent clearing fees charged by CCPs Article 10 1 A CCP shall only charge fees for clearing transactions executed on a trading venue to which it has granted access on the basis of objective criteria, applicable to all clearing members and, where relevant, clients. For this purpose, a CCP shall make all clearing members and, where relevant, clients subject to the same schedule of fees and rebates and its fees shall not depend on the trading venue where the transaction takes place. 2 A CCP shall only charge fees to a trading venue in relation to access on the basis of objective criteria. For this purpose, the same fees and rebates shall apply to all trading venues accessing the CCP with regard to the same or similar financial instruments, unless a different fee schedule can be objectively justified. 3 In accordance with Article 38 of Regulation (EU) No 648/2012 a CCP shall ensure that the fee schedules referred to in paragraphs 1 and 2 of this Article are easily accessible, adequately identified per service provided and sufficiently granular in order to ensure that fees charged are predictable. 4 Paragraphs 1 to 3 shall apply to fees charged to cover one-off and ongoing costs. Non-discriminatory and transparent fees charged by trading venues Article 11 1 A trading venue shall only charge fees in relation to access on the basis of objective criteria. For this purpose, the same schedule of fees and rebates shall apply to all CCPs accessing the trading venue with regard to the same or similar financial instruments, unless a different fee schedule can be objectively justified. 2 A trading venue shall ensure that the fee schedules referred to in paragraph 1 are easily accessible, that the fees are adequately identified per service provided and sufficiently granular in order to ensure that the arising fees are predictable. 3 Paragraphs 1 and 2 shall apply to all fees related to access, including those that are charged to cover one-off and ongoing costs. CHAPTER III <Strong>CONDITIONS FOR NON-DISCRIMINATORY TREATMENT OF CONTRACTS</Strong> Collateral and margining requirements of economically equivalent contracts Article 12 1 The CCP shall determine whether contracts traded on the trading venue to which it has granted access are economically equivalent to contracts with similar risk characteristics already cleared by the CCP. 2 For the purposes of this article, a CCP shall consider all contracts traded on the trading venue to which it has granted access, which are in the class of financial instruments covered by the CCP's authorisation referred to in Article 14 of Regulation (EU) No 648/2012, or by any subsequent extension of authorisation referred to in Article 15 of that Regulation, as economically equivalent to the contracts in the respective class of financial instruments already cleared by the CCP. 3 A CCP may consider a contract traded on the trading venue to which it has granted access, which presents a significantly different risk profile or material differences from the contracts already cleared by the CCP in the respective class of financial instruments, as non-economically equivalent where the CCP had obtained an extension of the authorisation pursuant to Article 15 of Regulation (EU) No 648/2012 with respect to that contract and in connection with that trading venue's access request. 4 A CCP shall apply to economically equivalent contracts referred to in paragraph 1 the same margin and collateral methodologies, irrespective of where the contracts are traded. A CCP shall subject the clearing of an economically equivalent contract referred to in paragraph 1 to the adoption of changes to the CCP's risk models and parameters, only if necessary in order to mitigate the risk factors in relation to that trading venue or the contracts traded thereon. Such changes shall be considered as significant changes to the CCP's models and parameters referred to in Articles 28 and 49 of Regulation (EU) No 648/2012. Netting of economically equivalent contracts Article 13 1 A CCP shall apply to economically equivalent contracts referred to in Article 12(1) of this Regulation the same netting procedures irrespective of where the contracts were traded, provided that any netting procedure it applies is valid and enforceable in accordance with Directive 98/26/EC and applicable insolvency law. 2 A CCP considering that the legal risk or the basis risk related to a netting procedure it applies to an economically equivalent contract is not sufficiently mitigated, shall subject the clearing of such a contract to the adoption of changes to that netting procedure excluding the netting of such contract. Such changes shall be considered as significant changes to the CCP's risk models and parameters referred to in Article 28 and 49 of Regulation (EU) No 648/2012. 3 For the purpose of paragraph 2, ‘basis risk’ shall mean the risk arising from less than perfectly correlated movements between two or more assets or contracts cleared by the CCP. Cross-margining of correlated contracts cleared by the same CCP Article 14 Where a CCP calculates margins with respect to cross-margining of correlated contracts cleared by the same CCP (portfolio margining) in accordance with Article 41 of Regulation (EU) No 648/2012 and Article 27 of Commission Delegated Regulation (EU) No 153/2013, the CCP shall apply its portfolio margining approach to all relevant correlated contracts irrespective of where the contracts are traded. Contracts with a significant and reliable correlation, or an equivalent statistical parameter of dependence, shall benefit from the same offsets or reductions. CHAPTER IV <Strong>TRANSITIONAL ARRANGEMENTS AND FINAL PROVISIONS</Strong> Notification procedure from the CCP to its competent authority Article 15 Where a CCP applies for permission to avail itself of transitional arrangements referred to in Article 35(5) of Regulation (EU) No 600/2014, it shall submit a notification to its competent authority in written form, using Form 1 set out in the Annex to this Regulation. Notification procedure from the competent authority to ESMA and the CCP college Article 16 Relevant competent authorities shall notify ESMA and the CCP college of every decision to approve a transitional arrangement in accordance with Article 35(5) of Regulation (EU) No 600/2014 in writing without undue delay and no later than one month from the decision, using Form 2 set out in the Annex to this Regulation. Notification procedure from the trading venue to its competent authority regarding the initial transitional period Article 17 Where a trading venue does not wish to be bound by Article 36 of Regulation (EU) No 600/2014, it shall submit a notification to its competent authority and ESMA in written form, using Forms 3.1 and 3.2 set out in the Annex to this Regulation. Notification procedure from the trading venue to its competent authority regarding an extension of the transitional periodArticle 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Further specifications for the calculation of notional amountArticle 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approval and verification method by ESMAArticle 20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Entry into force and application Article 21 This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from 3 January 2018. However, Articles 15, 16, 17, 19 and 20 shall apply from the entry into force of this Regulation. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 24 June 2016 For the Commission The President Jean-Claude Juncker Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349). Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). Commission Delegated Regulation (EU) No 153/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to regulatory technical standards on requirements for central counterparties (OJ L 52, 23.2.2013, p. 41). Art. 18 omitted (18.10.2021) by virtue of The Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021 (revoked) 2021 (S.I. 2021/1074), regs. 1(2), 4(2)Art. 19 omitted (18.10.2021) by virtue of The Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021 (revoked) 2021 (S.I. 2021/1074), regs. 1(2), 4(2)Art. 20 omitted (18.10.2021) by virtue of The Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021 (revoked) 2021 (S.I. 2021/1074), regs. 1(2), 4(2)