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EMIR ToolDelegated Regulation 2020/1304
ANNEX II

ANNEX II - ELEMENTS REFERRED TO IN ARTICLE 4(1)

ANNEX II

ELEMENTS REFERRED TO IN ARTICLE 4(1)

Provision of Union law

Elements referred to in Article 4(1)

Interoperability arrangements

Article 51(2)of Regulation (EU) No 648/2012

Where an interoperability arrangement is established to provide services to a particular trading venue, the third-country CCP has non-discriminatory access both to the data that it needs for the performance of its functions from that particular trading venue and to the relevant settlement system;

Article 51(3)of Regulation (EU) No 648/2012

The third-country CCP rejects or restricts entering into an interoperability arrangement or accessing a data feed or a settlement system, directly or indirectly, only in order to control any risk arising from that arrangement or access.

Risk management

Paragraphs 1 and 2 of Article 52 of Regulation (EU) No 648/2012

The CCPs that have entered into an interoperability arrangement :

(a)

have in place adequate policies, procedures and systems to effectively identify, monitor and manage the risks arising from that interoperability arrangement so that they can meet their obligations in a timely manner;

(b)

agree on their respective rights and obligations, including the applicable law governing their relationships;

(c)

identify, monitor and effectively manage credit and liquidity risks so that a default of a clearing member of one CCP does not affect an interoperable CCP;

(d)

identify, monitor and address potential interdependences and correlations that arise from an interoperability arrangement that may affect credit and liquidity risks relating to clearing member concentrations, and pooled financial resources;

(e)

where the risk-management models used by the interoperable CCPs to cover their exposure to their clearing members or their reciprocal exposures are different, those CCPs identify those differences, assess risks that may arise therefrom and take measures, including securing additional financial resources, that limit their impact on the interoperability arrangement as well as their potential consequences in terms of contagion risks and ensure that these differences do not affect each CCP’s ability to manage the consequences of the default of a clearing member.

Provision of margins among CCPs

Article 53 of Regulation (EU) No 648/2012

The third-country CCP distinguishes in accounts the assets and positions held for the account of CCPs with which it has entered into an interoperability arrangement.

The third-country CCP only provides initial margins to that CCP under a security financial collateral arrangement by which the receiving CCP has no right of use over the margins provided by the other CCP.

Collateral received in the form of financial instruments is protected in either of the following manners:

(i)

it is deposited with operators of securities settlement systems that ensure the full protection of those financial instruments;

(ii)

other highly secure arrangements with authorised financial institutions are used;

Assets are available to the receiving CCP only in case of default of the CCP which has provided the collateral in the context of an interoperability arrangement.

In case of default of the CCP which has received the collateral in the context of an interoperability arrangement, the collateral provided is readily returned to the providing CCP.