The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) (No. 2) Regulations 2019

In section 313(1) (interpretation of Part 18) of the Financial Services and Markets Act 2000^f1, in the definition of “the EMIR Regulation”^f2 for the words from “Regulation (EU) 648/2012” to “trade repositories” substitute “Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories”.

In Article 35A (trade repositories) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001^f1, in paragraph (2) for “Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019” substitute “Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) (No.2) Regulations 2019”.

In regulation 2 (interpretation) of the Financial Regulators’ Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018^f1, at the end of paragraph (e) insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

In regulation 1(4) (citation, commencement and interpretation) of the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018^f1, in the definition of “the EMIR Regulation” at the end insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

The Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018^f1 are amended as follows.

In regulation 3 (amendment of provision in respect of the requirements for trade repositories)—

In regulation 4 (interpretation), at the end insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment etc., and Transitional Provision) (EU Exit) Regulations 2019^f1 are amended as follows.

In regulation 1 (citation, commencement and interpretation), in paragraph (2) in the definition of “EMIR regulation” at the end insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

In regulation 11(definitions)^f1—

In regulation 13 (intragroup transactions)—

In regulation 14(2) (clearing obligation)—

In regulation 15(3) (clearing obligation procedure), in the substituted paragraph 2 of Article 5, in the first sub-paragraph, omit point (c).

In regulation 19 (reporting obligation), omit paragraph (5).

In regulation 20 (non-financial counterparties)—

In regulation 21(12) (risk-mitigation techniques for OTC derivative contracts not cleared by a CCP), in the text substituting paragraph 15 of Article 11, for “required for compliance with paragraph 3” substitute “referred to in paragraph 3, and the supervisory procedures to ensure initial and ongoing validation of those risk-management procedures.”

In regulation 1(4)(g) (interpretation) of the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc.) (EU Exit) Regulations 2019^f1 after “trade repositories” insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

In regulation 4(b)(i) (scope) of the Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019^f1, in the words to be inserted into point (c) of paragraph 2 of Article 2 of Regulation (EU) 2016/1011, after “trade repositories” insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

In regulation 2 (interpretation) of the Securitisation (Amendment) (EU Exit) Regulations 2019^f1, in the definition of “the EMIR regulation” at the end insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

For regulation 4(2)(c) (definition of the EMIR regulation) of the Public Record, Disclosure of Information and Co-operation (Financial Services) (Amendment) (EU Exit) Regulations 2019^f1 substitute—

“(c)

for the definition of “the EMIR regulation” substitute—

• ““the EMIR regulation” has the same meaning as in Part 18 of the Act (see section 313(1));”;”.

In paragraph 63 of Schedule 1 (consequential amendments) to the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019^f1, in sub-paragraph (1), after “trade repositories” insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

In regulation 26 of the Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019^f1, after “trade repositories” insert “as amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019”.

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories is amended as follows.

In Article 2, for point (10) substitute—

“(10)

‘pension scheme arrangement’ means:

(a)

an occupational pension scheme within the meaning of section 1(1) of the Pension Schemes Act 1993^f1 which has its main administration in the United Kingdom, including the trustees and managers of such a scheme, and any legal entity set up for the purpose of investment of such a scheme acting solely and exclusively in its interest;

(b)

occupational retirement provision businesses of insurance and reinsurance undertakings within the meaning of section 417 of FSMA, provided that all assets and liabilities corresponding to the businesses are ring-fenced, managed and organised separately from the other activities of the insurance or reinsurance undertaking, without any possibility of transfer;

(c)

any other authorised and supervised entities, or arrangements, established in the United Kingdom, provided that:

(i)

they are recognised under the law applying to any part of the United Kingdom; and

(ii)

their primary purpose is to provide retirement benefits;”.

In Article 4a—

For Article 6a, substitute—

“Article 6a

Suspension of the clearing obligation

1.

The Bank of England may, with the consent of the Treasury, direct that the clearing obligation referred to in Article 4(1) be suspended for specific classes of OTC derivatives or for a specific type of counterparty if one of the following conditions is met:

(a)

the specific classes of OTC derivatives are no longer suitable for central clearing in accordance with the criteria referred to in the first sub-paragraph of Article 5(4) and in Article 5(5);

(b)

a CCP is likely to cease clearing those specific classes of OTC derivatives and no other CCP is able to clear those specific classes of OTC derivatives without interruption;

(c)

the suspension of the clearing obligation for those specific classes of OTC derivatives or for a specific type of counterparty is necessary to avoid or address a serious threat to financial stability or to the orderly functioning of financial markets in the United Kingdom and the suspension is proportionate to those aims.

The Bank of England must inform the FCA of its intention to make a direction as soon as is reasonably practicable after making the decision to make a direction.

2.

The FCA may inform the Bank of England that, in its opinion, there is evidence that one of the conditions for suspension of the clearing obligation set out in paragraph 1 has been met. The Bank shall consider the FCA’s information, and respond as appropriate within a reasonable time from the receipt of that information.

3.

A direction under paragraph 1 to suspend the clearing obligation for specific classes of OTC derivatives shall also trigger a suspension of the trading obligation laid down in Article 28(1) and (2) of Regulation (EU) No 600/2014 for the same classes of OTC derivatives that are subject to the suspension of the clearing obligation.

4.

The Bank shall set the period for the suspension of the clearing obligation and the trading obligation. The suspension shall be for a period of no more than twelve months beginning with the day the decision was published on the Bank of England’s website in accordance with paragraph 5.

5.

A direction to suspend the clearing and trading obligations must be published on the websites of the Bank of England and the FCA and be included within the public register referred to in Article 6. The FCA must also update the register of derivatives that are subject to the trading obligation referred to in Article 34 of Regulation (EU) No 600/2014.”.

In Article 10, in paragraph 2a, after “shall” insert “seek to”.

In Article 76a—

In Article 80, in paragraph 5a, omit “counterparties that are not required to report the details of their OTC derivative contracts pursuant to Article 9(1a) to (1d) and”.

In Article 81—

In Article 89—

(This note is not part of the Regulations)