(1)

Restoring the long-term viability of the central counterparty (CCP) following the application of the relevant resolution tools is considered to be achieved where, at the latest by the end of the business reorganisation period, the CCP is capable of fulfilling all the relevant prudential and other regulatory requirements on a forward-looking basis, and has a viable business model that is also sustainable in the long term.

(2)

A business reorganisation plan should take into account the event that led to the resolution authority taking resolution action in accordance with Article 22(1) of Regulation (EU) 2021/23 (‘trigger event’). The business reorganisation plan is to include a detailed analysis of the factors and circumstances that led to that event, which are important variables for drawing up the business reorganisation plan and for identifying appropriate business reorganisation measures.

(3)

A business reorganisation plan is to set out the measures envisaged to restore the long-term viability of the CCP. In order to maximise their chance of achieving their objectives, they should be suitable for the CCP’s clearing services, should take into account the economic and financial market conditions under which the CCP will operate, should consider any effect on the CCP’s relevant stakeholders, and should ensure both the continuity of the CCP’s critical functions and compliance with regulatory requirements. For a business reorganisation plan to be considered credible by the resolution authority and the competent authority, it should restore the CCP’s long-term viability based on realistic assumptions and explain the reasons why some alternative measures have been discarded from the business reorganisation plan.

(4)

Like business reorganisation, recovery planning aims at improving the performance of an entity facing economic difficulties by identifying and addressing the causes of those difficulties. Therefore, to duly exploit synergies between both types of planning, when considering the restoration of viability and continuity of the CCP’s clearing services, the business reorganisation plan should use information contained in the recovery plan, to the extent that such information is relevant for the restoration of the long-term viability of the CCP.

(5)

A business reorganisation plan may include, where relevant, measures to reorganise and restructure the activities of the CCP, changes to the CCP’s operational system and infrastructure, or changes to the CCP’s risk management. To ensure the relevance of each measure, the business reorganisation plan should include a detailed presentation, taking into account the impact of the proposed measures on the CCP’s activities, clearing members and third-party providers, and demonstrating how that measure will restore the long-term viability of the CCP. In particular, to demonstrate that the CCP will remain compliant with the organisational and prudential requirements set out in Title IV of Regulation (EU) No 648/2012 of the European Parliament and of the Council (2), any change to the CCP’s risk management should be detailed and assessed in the business reorganisation plan.

(6)

A business reorganisation plan may include measures to sell or wind up some of the CCP’s assets or business lines. To ensure their efficiency, such measures should be supported by a detailed description of the business lines or assets considered for sale, how that sale would restore the CCP’s long-term viability, and any impact on the CCP’s continuity of operations.

(7)

To ensure a credible implementation of the business reorganisation plan, it should include an indicative timetable for the implementation of all the envisaged measures. The timetable should help identify the main milestones of the plan, including communication steps with external stakeholders.

(8)

When assessing whether the business reorganisation plan would restore the CCP’s long-term viability, the competent authority and the resolution authority should take into account both viability performance criteria and financial performance criteria, which are complementary to one another. The viability performance criteria should help verify that the business reorganisation plan is consistent with the CCP’s internal rules and regulations, and that it will allow the CCP to continue operating without posing significant risks to the financial system, while remaining compliant with all applicable prudential and organisational requirements. The financial performance criteria should help verify that the business reorganisation plan will guarantee the CCP’s financial long-term viability, both from an operational and economic viewpoint, post-reorganisation.

(9)

Fluctuations are an inherent part of the economic cycle. Any business reorganisation plan should include analyses of alternative scenarios, with appropriate changes in the key underlying assumptions to include worst-case and best-case assumptions. To ensure the credibility of the business reorganisation plan, the competent authority and the resolution authority should, when assessing the plan, verify that it relies on a set of comprehensive and realistic scenarios, which accurately reflect the CCP’s market environment, and its operational and legal constraints.

(10)

To ensure a credible implementation of the business reorganisation plan, the competent authority and the resolution authority should, when assessing that plan, ensure that both the senior management and key stakeholders have sufficient knowledge of the business reorganisation plan. As key stakeholders are essential or critical for the CCP in providing clearing services, they should include clearing members and critical service providers including settlement providers, and platform providers.

(11)

To ensure the appropriateness of the business reorganisation plan, the competent authority and the resolution authority should, when assessing the plan, verify that it preserves the critical functions of the CCP, and takes into account the specific characteristics of the CCP, including the nature of its clearing activities, the structure of the clearing market, and the interdependencies with other stakeholders including clearing members, trading venues or critical service providers. While making sure that all required details are included, the resolution authority should also assess that the business reorganisation plan is sufficiently concise and clear to allow it to be implemented swiftly.

(12)

To ensure the consistency of the business reorganisation plan, the competent authority and the resolution authority should, when assessing the plan, compare the business reorganisation plan with the CCPs’ earlier business plans, either prepared under their own ‘business as usual’ assumptions or where required by regulatory or legal obligations.

(13)

The provisions in this Regulation are closely linked to each other, since they deal with the business reorganisation plan that CCPs under resolution are required to submit after the application of the write down and conversion tool. To ensure coherence between those provisions, which should enter into force simultaneously, there is a need for CCPs and for resolution authorities, to have a comprehensive view and compact access to their obligations and rights relating to such business reorganisation plans. It is therefore appropriate to include the relevant regulatory technical standards required by Article 37(4) and Article 38(4) of Regulation (EU) 2021/23 in a single Regulation.

(14)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority.

(15)

The European Securities and Markets Authority has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Securities and Markets Stakeholder Group established by Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (3),