Updated 18/09/2024
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Article 4 - Critical functions

Article 4

Critical functions

When preparing a description of how the critical functions of the CCP could be legally and economically separated in accordance with Article 12(7), point (c), 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 of the functions regarded as critical by the resolution authority;

(b)

where material differences compared to the recovery plan’s list of critical functions exist, a detailed description of the main reasons why the resolution authority has assessed the critical functions differently, the material effects of such different assessment and how this could affect the resolvability of the CCP;

(c)

a description of the main dependencies between critical functions and critical interdependencies and of the key internal and external arrangements and processes, including operations, IT procedures, a list of key staff and main service providers that are necessary for the CCP to continue providing its critical functions, or any other aspects that may be necessary to consider in view of a possible transfer of some or all of the operations of the CCP to another financial market infrastructure or bridge CCP, where that is part of the proposed resolution strategy;

(d)

a description of how critical functions could be separated from non-critical functions in economic, operational and legal terms and including details on how the resolution authority has assessed the material effects of such separation on stakeholders, including:

(i)

material effects on netting sets for clearing members where transactions are split into different silos of the CCP or a different CCP;

(ii)

where possible to identify, material effects on operations or legal effects of splitting transactions into different CCPs and the effects on clearing members, clients and indirect clients;

(iii)

where possible to identify, material effects on the calculation of collateral requirements and in particular variation margins and how the separation would affect the collateral requested by clearing members, clients and indirect clients;

(iv)

where possible to identify, an evaluation of the price of transfer of such transactions;

(e)

a summary of how the CCP’s proposed approach to separating, or not, the CCP’s critical functions from its other functions may affect the resolvability assessment for the CCP;

(f)

a mapping of critical functions to identified legal entities and to the CCP’s core business lines.