Updated 18/09/2024
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Article 12 - Critical interdependencies

Article 12

Critical interdependencies

When preparing a description of the critical interdependencies referred to in Article 12(7), point (k), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a)

a description under the resolution plan of all critical interdependencies that have been identified;

(b)

if identified interdependencies as referred to in point (a) entail any material differences compared to the recovery plan’s list of critical interdependencies, a detailed description of the main reasons for which the resolution authority has assessed the critical interdependencies differently and any material consequence for the application of the resolution plan due to the different assessments of critical interdependencies and how this can affect the resolvability of the CCP;

(c)

a description of the different types of entities with interdependencies to the CCP, including a list containing all relevant stakeholders including the CCP’s direct and indirect participants, where possible to identify, owners, financial service providers such as liquidity providers, settlement banks or agents, platforms, investment agents, banks, custodians and other service providers, including IT providers and data providers, and linked financial markets infrastructures, and their relevance to the resolution procedure;

(d)

a description of the assessment of the entities, as referred to in point (c), with an interdependence to the CCP, covering their importance for the CCP, in particular, why they would or would not be considered critical, and if the ability of the CCP to continue providing its critical functions is dependent on these entities;

(e)

a description of outsourcing arrangements to critical service providers that cover part of the CCP’s core business, including where another entity undertakes price determination and provides systems for the clearing, margin calculations or other essential parts of the CCP’s operations;

(f)

a description of how entities identified to have a critical interdependency with the CCP under point (a) have been assessed and how any identified risks have been mitigated and addressed, including legal enforceability and regulatory constraints of arrangements such as set-off and netting, to ensure operational continuity in resolution;

(g)

a description of how any material issues, due to a potential failure to comply with obligations under outsourcing arrangements by the provider of critical outsourced service arrangements have been mitigated in the resolution plan;

(h)

a description of how the resolution plan has reflected the potential impact of applying the resolution tools on any interoperable CCP, covering the transmission of resolution cash calls or variation margin gains haircutting via an interoperability arrangement;

(i)

a description of possible impacts on other financial market infrastructures linked to the CCP, including by assessing the significance of the CCP’s involvement in those entities including whether the CCP’s resolution could cause contagion through financial market infrastructures by triggering of default procedures in financial market infrastructures, or leaving other firms without access to financial market infrastructures.