Updated 07/09/2024
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Article 57

Article 57 - Power to temporarily suspend termination rights

Article 57

Power to temporarily suspend termination rights

1.   The resolution authority may suspend the termination rights of any party to a contract with a CCP under resolution from the publication of the notice of the termination in accordance with Article 72 until the end of the working day which follows that publication, provided that the payment and delivery obligations and the provision of collateral continue to be performed.

For the purposes of the first subparagraph, the end of the working day shall mean midnight in the Member State of the resolution.

2.   The resolution authority shall not exercise the power referred to in paragraph 1 in relation to systems or operators of systems designated for the purposes of Directive 98/26/EC, other CCPs and central banks.

3.   A party to a contract may exercise a termination right under that contract before the end of the period referred to in paragraph 1 where that party receives notice from the resolution authority that the rights and liabilities covered by the contract shall not be:

(a)

transferred to another entity; or

(b)

subject to write-down, conversion, or the application of a resolution tool to allocate losses or positions.

4.   Where the notice referred to in paragraph 3 of this Article has not been given, termination rights may be exercised on the expiry of the period of suspension, subject to Article 54, as follows:

(a)

where the rights and liabilities covered by the contract have been transferred to another entity, a counterparty may exercise termination rights in accordance with the terms of that contract only if the recipient entity causes the enforcement event to occur or continue;

(b)

where the rights and liabilities covered by the contract remain with the CCP, a counterparty may exercise termination rights in accordance with the conditions for termination as set out in the contract between the CCP and the relevant counterparty only if the enforcement event occurs or continues after the expiry of a suspension under paragraph 1 of this Article.