Article 9
1. CCPs shall draw up and maintain a recovery plan providing for measures to be taken in the case of both default and non-default events and combinations of both, in order to restore their financial soundness, without any extraordinary public financial support, and allow them to continue to provide critical functions following a significant deterioration of their financial situation or a risk of breaching their capital and prudential requirements under Regulation (EU) No 648/2012.
2. The measures included in the recovery plan shall:
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(a) |
comprehensively and effectively address all the risks identified in the different scenarios, including possible uncovered liquidity shortfalls; |
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(b) |
in the case of losses due to a default event, ensure the re-establishment of a matched book and the full allocation of uncovered losses to clearing members, and to their clients if those clients are direct creditors of the CCP, and to shareholders, taking into account the interests of all stakeholders; |
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(c) |
include loss-absorbing arrangements that are adequate to cover the losses that might arise from all types of non-default events; and |
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(d) |
enable the replenishment of the CCP’s financial resources, including its own funds, to a level sufficient in order for the CCP to meet its obligations under Regulation (EU) No 648/2012 and to support the continued and timely operation of the critical functions of the CCP. |
3. The recovery plan shall include a framework of indicators based on the risk profile of the CCP, that identify the circumstances under which measures in the recovery plan are to be taken. The indicators may be of either a qualitative or a quantitative nature relating to the financial soundness and operational viability of the CCP and should enable recovery measures to be taken early enough to provide sufficient time for the plan to be implemented.
4. CCPs shall put in place appropriate arrangements for the regular monitoring of the indicators referred to in paragraph 3. CCPs shall report to their competent authorities on the outcome of that monitoring. Competent authorities shall transmit information to the supervisory college, where they deem such information significant.
5. ESMA shall, in cooperation with the ESRB, by 12 February 2022, issue guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 to specify the minimum list of qualitative and quantitative indicators referred to in paragraph 3 of this Article.
6. CCPs shall include provisions in their operating rules, outlining the procedures to be followed by them where, in order to achieve the goals of the recovery process, they propose to:
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(a) |
take measures provided for in their recovery plan despite the fact that the relevant indicators have not been met; or |
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(b) |
refrain from taking measures provided for in their recovery plan despite the fact that the relevant indicators have been met. |
Any decision taken pursuant to this paragraph and its justification shall be notified to the competent authority without delay.
7. Where a CCP intends to activate its recovery plan, it shall notify the competent authority of the nature and magnitude of the problems it has identified, setting out all relevant circumstances and indicating the recovery measures or other measures it intends to take to address the situation as well as the envisaged time-frame to restore its financial soundness by use of those measures.
Where the competent authority considers that a recovery measure that the CCP intends to take may cause significant adverse effects to the financial system or is unlikely to be effective, it may require the CCP to refrain from taking that measure.
Following the notification received under the second subparagraph of paragraph 6 of this Article, the competent authority shall immediately assess whether the circumstances require the use of early intervention powers in accordance with Article 18.
8. The competent authority shall promptly inform the resolution authority and the supervisory college, and the resolution authority shall promptly inform the resolution college, of any notification received in accordance with the second subparagraph of paragraph 6 and with the first subparagraph of paragraph 7, and of any subsequent instruction by the competent authority in accordance with the second subparagraph of paragraph 7.
Where the competent authority is informed in accordance with the first subparagraph of paragraph 7 of this Article, it shall restrict or prohibit any remuneration of equity and instruments treated as equity, including dividend payments and buybacks by the CCP, to the fullest extent possible without triggering an event of default, and it may restrict or prohibit any payments of variable remuneration as defined by the CCP’s remuneration policy pursuant to Article 26(5) of Regulation (EU) No 648/2012, discretionary pension benefits or severance packages to senior management as defined in point 29 of Article 2 of Regulation (EU) No 648/2012.
9. CCPs shall, at least annually and in any case after any change to their legal or organisational structure or business or financial situation which could have a material effect on those plans or otherwise necessitate a change to the plans, review, test and, where necessary, update their recovery plans. Competent authorities may require CCPs to update their recovery plans more frequently.
10. Recovery plans shall be drawn up in accordance with Section A of the Annex and take into account all relevant interdependencies within the group to which the CCP belongs. Competent authorities may require CCPs to include additional information in their recovery plans. Where relevant, the competent authority of the CCP shall consult the competent authority of the CCP’s parent undertaking.
11. Recovery plans shall:
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(a) |
not assume any access to or receipt of extraordinary public financial support, central bank emergency liquidity assistance or central bank liquidity assistance provided under non-standard collateralisation, tenor and interest rate terms; |
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(b) |
consider the interests of all stakeholders that are likely to be affected by the plan, including clearing members and, to the extent that the information is available, their direct and indirect clients; and |
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(c) |
ensure that clearing members do not have unlimited exposures toward the CCP and stakeholders’ potential losses and liquidity shortfalls are transparent, measurable, manageable and controllable. |
12. ESMA shall, in cooperation with the ESRB, by 12 February 2022 issue guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 further specifying the range of scenarios to be considered for the purposes of paragraph 1 of this Article. In issuing such guidelines, ESMA shall take into account, where appropriate, supervisory stress testing exercises.
13. Where the CCP is part of a group and contractual parental or group support agreements form part of the recovery plan, the recovery plan shall contemplate scenarios in which those agreements cannot be honoured.
14. Following a default or a non-default event, a CCP shall use an additional amount of its pre-funded dedicated own resources, prior to the use of the arrangements and measures referred to in point 15 of Section A of the Annex to this Regulation. That amount shall not be lower than 10 % nor higher than 25 % of the risk-based capital requirements calculated in accordance with Article 16(2) of Regulation (EU) No 648/2012.
To comply with that requirement, the CCP may use the amount of capital it holds, in addition to its minimum capital requirements, to comply with the notification threshold referred to in the delegated act adopted on the basis of Article 16(3) of Regulation (EU) No 648/2012.
15. ESMA shall, in close cooperation with EBA and after consulting the ESCB, develop draft regulatory technical standards specifying the methodology for calculation and maintenance of the additional amount of pre-funded dedicated own resources to be used in accordance with paragraph 14. When developing those technical standards, ESMA shall take into account all of the following:
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(a) |
the structure and the internal organisation of CCPs and the nature, scope and complexity of their activities; |
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(b) |
the structure of incentives of the shareholders, management and clearing members of CCPs and of the clients of clearing members; |
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(c) |
the appropriateness for CCPs, depending on the currencies in which the financial instruments they clear are denominated, the currencies accepted as collateral and the risk stemming from their activities, in particular where they do not clear OTC derivatives as defined in point (7) of Article 2 of Regulation (EU) No 648/2012, to invest that additional amount of dedicated own resources in assets other than those referred to in Article 47(1) of that Regulation; and |
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(d) |
the rules applying to and the practices of third-country CCPs, as well as the international developments concerning the recovery and resolution of CCPs, in order to preserve the competitiveness of internationally active Union CCPs, and the competitiveness of Union CCPs compared to third-country CCPs providing clearing services in the Union. |
Where ESMA concludes, on the basis of the criteria referred to in point (c) of the first subparagraph, that it is appropriate for certain CCPs to invest that additional amount of pre-funded dedicated own resources in assets other than those referred to in Article 47(1) of Regulation (EU) No 648/2012, it shall also specify:
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(a) |
the procedure through which, in the event that those resources are not immediately available, CCPs may resort to recovery measures that require the financial contribution of non-defaulting clearing members; |
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(b) |
the procedure that CCPs shall follow to subsequently reimburse the non-defaulting clearing members referred to in point (a) up to the amount to be used in accordance with paragraph 14 of this Article. |
ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
16. The CCP shall develop adequate mechanisms to involve linked FMIs and stakeholders which would bear losses, incur costs or contribute to cover liquidity shortfalls in the event that the recovery plan was implemented in the process of drawing-up of that plan.
17. The board of the CCP shall assess, taking into account the advice of the risk committee in accordance with Article 28(3) of Regulation (EU) No 648/2012, and approve the recovery plan before submitting it to the competent authority.
18. Where the board of the CCP has decided not to follow the advice of the risk committee, it shall promptly inform the competent authority in accordance with Article 28(5) of Regulation (EU) No 648/2012 and explain its decision in detail to the competent authority.
19. Recovery plans shall be integrated in the corporate governance and the overall risk management framework of the CCP.
20. The measures set out in the recovery plans that create financial or contractual obligations on clearing members and, where relevant, clients and indirect clients, linked FMIs or trading venues shall form part of the operating rules of CCPs.
21. CCPs shall ensure that the measures set out in the recovery plans are enforceable at all times in all jurisdictions where the clearing members, linked FMIs or trading venues are located.
22. The obligation of CCPs to include in their recovery plans the right to make a recovery cash call and, if applicable, to reduce the value of any gains payable by the CCPs to non-defaulting clearing members shall not be applicable to the entities referred to in Articles 1(4) and 1(5) of Regulation (EU) No 648/2012.
23. Clearing members shall communicate to their clients in a clear and transparent manner if and in what way measures in the CCP’s recovery plan may affect them.