Article 24
Objectives of valuation
1. Resolution authorities shall ensure that any resolution action is taken on the basis of a valuation ensuring a fair, prudent and realistic assessment of the assets, liabilities, rights and obligations of the CCP.
2. Before the resolution authority places a CCP under resolution, it shall ensure that a first valuation is carried out to determine whether the conditions for resolution under Article 22(1) are met.
3. After the resolution authority has decided to place a CCP under resolution, it shall ensure that a second valuation is carried out to:
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(a) |
inform the decision on the appropriate resolution action to be taken; |
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(b) |
ensure that any losses on the assets and rights of the CCP are fully recognised at the moment the resolution tools are applied; |
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(c) |
inform the decision on the extent of the cancellation or dilution of instruments of ownership and the decision on the value and number of instruments of ownership issued or transferred as a result of the exercise of resolution powers; |
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(d) |
inform the decision on the extent of the write-down or conversion of any unsecured liabilities, including debt instruments; |
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(e) |
where the loss and position allocation tools are applied, inform the decision on the extent of losses to be applied against affected creditors’ claims, outstanding obligations or positions in relation to the CCP and on the extent and necessity of a resolution cash call; |
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(f) |
where the bridge CCP tool is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the bridge CCP and the decision on the value of any consideration that may be paid to the CCP under resolution or, where relevant, to the holders of the instruments of ownership; |
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(g) |
where the sale of business tool is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the third party purchaser and to inform the resolution authority’s understanding of what constitutes commercial terms for the purposes of Article 40. |
For the purposes of point (d), the valuation shall take into account any losses that would be absorbed by the enforcement of any outstanding obligations of the clearing members or other third parties owed to the CCP and the level of conversion to be applied to debt instruments.
4. The valuations referred to in paragraphs 2 and 3 of this Article may be subject to an appeal in accordance with Article 74 only together with the decision to apply a resolution tool or to exercise a resolution power.