European Market Infrastructure Regulation

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Article 3 Intragroup transactions 1. In relation to a non-financial counterparty, an intragroup transaction shall be an OTC derivative contract entered into with another counterparty which is part of the same group provided that the following conditions are met: (a) both counterparties are … 634 unchanged words … purposes of this Article, transactions with counterparties established in any of the following third countries shall not benefit from any of the exemptions for intragroup transactions: (a) where the third country is a high-risk third country, as referred to in Article 29 9 of Regulation Directive (EU) 2024/1624 2015/849 of the European Parliament and of the CouncilRegulation CouncilDirective (EU) 2024/1624 2015/849 of the European Parliament and of the Council of 31 20 May 2024 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L, 2024/1624, 19.6.2024, L 141, 5.6.2015, p. 73, ELI: http://data.europa.eu/eli/reg/2024/1624/oj).; http://data.europa.eu/eli/dir/2015/849/oj).; (b) where the third country is listed in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes in its most up-to-date version. 5. Where appropriate due to identified issues in the legal, supervisory and enforcement arrangements of a third country and where those issues result in increased risks, including counterparty credit risk and legal risk, the Commission is empowered to adopt delegated acts in accordance with Article 82 to supplement this Regulation by identifying the third countries whose entities are not permitted to benefit from any of the exemptions for intragroup transactions despite those third countries not being third countries as referred to in paragraph 4 of this Article.

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Article 4a Financial counterparties that are subject to the clearing obligation 1. Every 12 months, a financial counterparty taking positions in OTC derivative contracts may calculate its aggregate month-end average position for the previous 12 months in accordance with paragraph 3. Where a … 353 unchanged words … the manager; and (b) a circumvention of the clearing obligation. The relevant competent authorities of the financial counterparty and of the other entities within the group shall establish cooperation procedures to ensure the effective calculation of the positions at the group level.4. ESMA, after having consulted the ESRB and other relevant authorities, shall develop draft regulatory technical standards to specify the value of the clearing thresholds applicable to aggregate positions where necessary to ensure the prudent coverage of financial counterparties under the clearing obligation. Where ESMA, in accordance with Article 10(4a), reviews the clearing thresholds specified pursuant to Article 10(4), first subparagraph, point (b), ESMA shall also review the clearing threshold specified pursuant to the first subparagraph of this paragraph. ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by 25 December 2025. Power is delegated to the Commission 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. 5. For the purposes of this Article and Article 10, uncleared position means the aggregate month-end average position for the previous 12 months in OTC derivative contracts that are not cleared by a CCP authorised under Article 14 or recognised under Article 25.

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Article 10 Non-financial counterparties 1. Every 12 months, a non-financial counterparty taking positions in OTC derivative contracts may calculate its aggregate month-end average position for the previous 12 months in accordance with paragraph 3. Where a non-financial counterparty does not calculate its positions, … 332 unchanged words … or by other non-financial entities within the group to which the non-financial counterparty belongs, which are not objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of the non-financial counterparty or of that group. 4. In order to ensure consistent application of this Article, ESMA shall develop draft regulatory technical standards, ESMA, after consulting having consulted the ESRB and other relevant authorities, specifying: shall develop draft regulatory technical standards to specify: (a) the criteria for establishing which OTC derivative contracts are objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity referred to in paragraph 3; and (b) the values of the clearing thresholds, thresholds for uncleared positions, which are determined taking into account the calculation methodology set out in paragraph 3 of this Article and Article 4a(3), the systemic relevance of the sum of net positions and exposures per counterparty and per class of OTC derivatives. After conducting an open public consultation, derivatives; and (c) the mechanisms triggering a review of the values of the clearing thresholds, following significant price fluctuations in the underlying class of OTC derivatives or a significant increase of financial stability risks. ESMA shall submit those the draft regulatory technical standards referred to in the first subparagraph to the Commission by 30 September 2012. 25 December 2025. Power is delegated to the Commission to adopt 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. After consulting 4a. ESMA, in consultation with the ESRB and other relevant authorities, ESMA ESRB, shall periodically review the clearing thresholds referred to in paragraph 4, first subparagraph, point (b) (b), of the first subparagraph and, where necessary this Article and in Article 4a(4), taking into account, in particular, the interconnectedness of financial counterparties, propose counterparties and the need to amend ensure the prudent coverage of financial counterparties under the clearing obligation. That review shall be conducted at least every two years, or earlier where necessary or where required under the mechanisms established under paragraph 4, first subparagraph, point (c). As a result of that review, ESMA may, in the regulatory technical standards adopted pursuant to paragraph 4, propose changes to the thresholds specified in accordance with this the first subparagraph, point (b), of that paragraph. When reviewing the clearing thresholds, ESMA shall consider whether the classes of OTC derivatives, for which a clearing threshold has been set, are still the relevant classes of OTC derivatives or if new classes should be introduced. That periodic review shall be accompanied by a report by ESMA on the subject. 4b. The relevant competent authorities of the non-financial counterparty and of the other entities within the group shall establish cooperation procedures to ensure the effective calculation of the positions and evaluate and assess the level of exposure in OTC derivative contracts at group level. 5. Each Member State shall designate an authority responsible for ensuring that the obligation obligations of non-financial counterparties under paragraph 1 this Regulation are met. That authority, in cooperation with the authorities responsible for the other entities of the group, shall report to ESMA at least every two years, and more frequently where an emergency situation is met. identified under Article 24, on the outcome of the assessment of the level of exposure in OTC derivatives of the non-financial counterparties for which it is responsible. The authority responsible for the Union parent undertaking of the group to which the non-financial counterparty belongs shall report to ESMA, at least every two years, on the outcome of the assessment of the level of exposure in OTC derivatives of the group. At least every two years from 24 December 2024, ESMA shall present a report to the European Parliament, the Council and the Commission on the activities of Union non-financial counterparties in OTC derivatives, identifying areas where there is a lack of convergence and coherence in the application of this Regulation as well as potential risks to the financial stability of the Union.

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Article 26 General provisions 1. A CCP shall have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks to which it is or might be exposed, and adequate internal control mechanisms, including sound administrative and accounting procedures. Without prejudice to interoperability arrangements under Title V or the conduct of its investment policy in accordance with Article 47, a CCP shall not be or become a clearing member, a client, or establish indirect clearing arrangements with a clearing member with the aim of undertaking clearing activities at a CCP. 2. A CCP shall adopt policies and procedures which are sufficiently effective so as to ensure compliance with this Regulation, including compliance of its managers and employees with all the provisions of this Regulation. 3. A CCP shall maintain and operate an organisational structure that ensures continuity and orderly functioning in the performance of its services and activities. It shall employ appropriate and proportionate systems, resources and procedures. procedures, including ICT systems managed in accordance with Regulation (EU) 2022/2554 of the European Parliament and of the CouncilRegulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, (EU) No 909/2014 and (EU) 2016/1011 (OJ L 333, 27.12.2022, p. 1).. 4. A CCP shall maintain a clear separation between the reporting lines for risk management and those for the other operations of the CCP. 5. A CCP shall adopt, implement and maintain a remuneration policy which promotes sound and effective risk management and which does not create incentives to relax risk standards. 6. A CCP shall maintain information technology systems adequate to deal with the complexity, variety and type of services and activities performed so as to ensure high standards of security and the integrity and confidentiality of the information maintained. 7. A CCP shall make its governance arrangements, the rules governing the CCP, and its admission criteria for clearing membership, available publicly free of charge. 8. The CCP shall be subject to frequent and independent audits. The results of those audits shall be communicated to the board of the CCP and shall be made available to ESMA and to the CCP’s competent authority. 9. In order to ensure consistent application of this Article, ESMA, after consulting the members of the ESCB, shall develop draft regulatory technical standards specifying the minimum content of the rules and governance arrangements referred to in paragraphs 1 to 8. ESMA shall submit those draft regulatory technical standards to the Commission by 30 September 2012. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

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Article 34 Business continuity 1. A CCP shall establish, implement and maintain an adequate business continuity policy and disaster recovery plan plan, which shall include ICT business continuity policy and ICT response and recovery plans put in place and implemented in accordance with Regulation (EU) 2022/2554, aiming at ensuring to ensure the preservation of its functions, the timely recovery of operations and the fulfilment of the CCP’s obligations. Such a plan shall at least allow for the recovery of all transactions at the time of disruption to allow the CCP to continue to operate with certainty and to complete settlement on the scheduled date. 2. A CCP shall establish, implement and maintain an adequate procedure ensuring the timely and orderly settlement or transfer of the assets and positions of clients and clearing members in the event of a withdrawal of authorisation pursuant to a decision under Article 20. 3. In order to ensure consistent application of this Article, ESMA shall, after consulting the members of the ESCB, develop draft regulatory technical standards specifying the minimum content and requirements of the business continuity policy and of the disaster recovery plan. plan, excluding ICT business continuity policy and disaster recovery plans. ESMA shall submit those draft regulatory technical standards to the Commission by 30 September 2012. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

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Article 56 Application for registration 1. For the purposes of Article 55(1), a trade repository shall submit either of the following to ESMA: (a) an application for registration; (b) an application for an extension of the registration where the trade repository is already registered under Chapter III of Regulation (EU) 2015/2365. 2. ESMA shall assess whether the application is complete within 20 working days of receipt of the application. Where the application is not complete, ESMA shall set a deadline by which the trade repository is to provide additional information. After assessing an application as complete, ESMA shall notify the trade repository accordingly. 3. To In order to ensure the consistent application of this Article, ESMA shall develop draft regulatory technical standards specifying the following: details, other than for requirements related to ICT risk management, of the application for registration referred to in paragraph 1. (a) the details of the application for the registration referred to in point (a) of paragraph 1; (b) the details of the simplified application for the extension of the registration referred to in point (b) of paragraph 1. ESMA shall submit those draft regulatory technical standards to the Commission by 18 June 2020. Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. 4. To ensure uniform conditions of application of paragraph 1, ESMA shall develop draft implementing technical standards specifying the following: (a) the format of the application for registration referred to in point (a) of paragraph 1; (b) the format of the application for an extension of the registration referred to in point (b) of paragraph 1. With regard to point (b) of the first subparagraph, ESMA shall develop a simplified format. ESMA shall submit those draft implementing technical standards to the Commission by 18 June 2020. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

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Article 79 Operational reliability 1. A trade repository shall identify sources of operational risk and minimise them also through the development of appropriate systems, controls and procedures. Such procedures, including ICT systems shall be reliable and secure and have adequate capacity to handle the information received. managed in accordance with Regulation (EU) 2022/2554. 2. A trade repository shall establish, implement and maintain an adequate business continuity policy and disaster recovery plan including ICT business continuity policy and ICT response and recovery plans established in accordance with Regulation (EU) 2022/2554, aiming at ensuring to ensure the maintenance of its functions, the timely recovery of operations and the fulfilment of the trade repository’s obligations. Such a plan shall at least provide for the establishment of backup facilities. 3. A trade repository from which registration has been withdrawn shall ensure orderly substitution including the transfer of data to other trade repositories and the redirection of reporting flows to other trade repositories.

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ANNEX I List of infringements referred to in Article 65(1) I. Infringements relating to organisational requirements or conflicts of interest: (a) a trade repository infringes Article 78(1) by not having robust governance arrangements which include a clear organisational structure with well-defined, transparent and … 343 unchanged words … to in Article 9 or where otherwise necessary. II. Infringements relating to operational requirements: (a) a trade repository infringes Article 79(1) by not identifying sources of operational risk or by not minimising those risks through the development of appropriate systems, controls and procedures; procedures including ICT systems managed in accordance with Regulation (EU) 2022/2554; (b) a trade repository infringes Article 79(2) by not establishing, implementing or maintaining an adequate business continuity policy and disaster recovery plan aimed at ensuring established in accordance with Regulation (EU) 2022/2554, aiming to ensure the maintenance of its functions, the timely recovery of operations and the fulfilment of the trade repository’s obligations; (c) a trade repository infringes Article 80(1) by not ensuring the confidentiality, integrity or protection of the information received under Article 9; (d) a trade repository infringes Article 80(2) by using the data that it receives under this Regulation for commercial purposes without the relevant counterparties having provided their consent; (e) a trade repository infringes Article 80(3) by not promptly recording the information received under Article 9 or by not maintaining it for at least 10 years following the termination of the relevant contracts or by not employing timely and efficient record-keeping procedures to document changes to recorded information; (f) a trade repository infringes Article 80(4) by not calculating the positions by class of derivatives and by reporting entity based on the details of the derivative contracts reported in accordance with Article 9; (g) a trade repository infringes Article 80(5) by not allowing the parties to a contract to access and correct the information on that contract in a timely manner; (h) a trade repository infringes Article 80(6) by not taking all reasonable steps to prevent any misuse of the information maintained in its systems. III. Infringements relating to transparency and the availability of information: (a) a trade repository infringes Article 81(1) by not regularly publishing, in an easily accessible way, aggregate positions by class of derivatives on the contracts reported to it; (b) a trade repository infringes Article 81(2) by not allowing the entities referred to in Article 81(3) direct and immediate access to the details of derivatives contracts they need to fulfil their respective responsibilities and mandates. IV. Infringements relating to obstacles to the supervisory activities: (a) a trade repository infringes Article 61(1) by providing incorrect or misleading information in response to a simple request for information by ESMA in accordance with Article 61(2) or in response to a decision by ESMA requiring information in accordance with Article 61(3); (b) a trade repository provides incorrect or misleading answers to questions asked pursuant to Article 62(1)(c); (c) a trade repository does not comply in due time with a supervisory measure adopted by ESMA pursuant to Article 73; (d) a trade repository infringes Article 55(4) by not notifying ESMA in due time of any material changes to the conditions for its registration.

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ANNEX III List of infringements referred to in Article 25j(1) I. Infringements relating to capital requirements: (a) a Tier 2 CCP infringes Article 16(1) by not having a permanent and available initial capital of at least EUR 7,5 million; (b) a Tier 2 CCP infringes Article 16(2) by not having capital, including retained earnings and reserves, which is proportionate to the risk stemming from its activities and at all times sufficient to ensure an orderly winding-down or restructuring of that activities over an appropriate time span and an adequate protection of the CCP against credit, counterparty, market, operational, legal and business risks which are not already covered by specific financial resources as referred to in Articles 41 to 44. II. Infringements relating to organisational requirements or conflicts of interest: (a) a Tier 2 CCP infringes Article 26(1) by not having robust governance arrangements which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks to which it is or might be exposed and adequate internal control mechanisms, including sound administrative and accounting procedures or by becoming a clearing member, a client, or establishing indirect clearing arrangements with a clearing member with the aim to undertake clearing activities at another CCP, unless such clearing activities are undertaken under an interoperability arrangement under Title V or where conducting its investment policies under Article 47; (b) a Tier 2 CCP infringes Article 26(2) by not adopting policies and procedures which are sufficiently effective to ensure compliance including that of its managers and employees, with this Regulation; (c) a Tier 2 CCP infringes Article 26(3) by not maintaining or operating an organisational structure that ensures continuity and orderly functioning in the performance of its services and activities or by not employing appropriate and proportionate systems, resources or procedures; procedures including ICT systems managed in accordance with Regulation (EU) 2022/2554; (d) a Tier 2 CCP infringes Article 26(4) by not maintaining a clear separation between the reporting lines for risk management and those for other operations of the CCP; (e) a Tier 2 CCP infringes Article 26(5) by not adopting, implementing … 1,408 unchanged words … not offering the different levels of segregation referred to in that paragraph on reasonable commercial terms. III. Infringements relating to operational requirements: (a) a Tier 2 CCP infringes Article 34(1) by not establishing, implementing or maintaining an adequate business continuity policy and disaster response and recovery plan aimed at ensuring set up in accordance with Regulation (EU) 2022/2554, aiming to ensure the preservation of its functions, the timely recovery of operations and the fulfilment of the CCP's CCP’s obligations, which at least allows for the recovery of all transactions at the time of disruption to allow the CCP to continue to operate with certainty and to complete settlement on the scheduled date; (b) a Tier 2 CCP infringes Article … 2,627 unchanged words … due time with a supervisory measure required by a decision adopted by ESMA pursuant to Article 25q; (e) a Tier 2 CCP does not submit to an on-site inspection required by an inspection decision adopted by ESMA pursuant to Article 25h.