Determined that the regulatory frameworks for central counterparties in several overseas jurisdictions are equivalent to United Kingdom standards to facilitate cross-border clearing services.
These Regulations establish the Treasury's determination that the legal and supervisory frameworks governing central counterparties (CCPs) in Australia, Hong Kong, India, Japan, South Africa, the United Arab Emirates, and the United States are equivalent to those of the United Kingdom.
The order directs the Bank of England to treat specified CCPs in these jurisdictions as meeting necessary regulatory standards, provided they are supervised by the designated national authorities listed in the Schedule.
These determinations apply specifically to CCPs established in the named jurisdictions and, in the case of certain United States entities, are contingent upon the maintenance of specific internal rules regarding procyclicality and financial resources.
Arguments For
The Treasury states that the legal and supervisory arrangements in the specified overseas jurisdictions ensure that resident CCPs comply with requirements equivalent to those laid down in Title IV of UK EMIR.
The document asserts that specified CCPs in these jurisdictions are subject to effective supervision and enforcement on an ongoing basis by their respective regulatory authorities.
The regulations claim that the legal frameworks of the specified jurisdictions provide an effective equivalent system for the recognition of CCPs authorised under legal regimes of other countries.
The Treasury notes that such determinations are a prerequisite under Article 25(1) of UK EMIR for the Bank of England to recognise overseas CCPs, allowing them to provide clearing services to UK-based members or trading venues.
Arguments Against
Legal scholars may note that the equivalence for certain US-based CCPs is conditional upon their internal rules meeting specific UK standards regarding procyclicality and financial resources, which could lead to regulatory gaps if internal rules change.
Affected parties might suggest that the reliance on specified regulatory authorities in third countries may create administrative complexity if those jurisdictions reorganize their supervisory structures.
Critics could argue that the lack of a full impact assessment, as noted in the explanatory memorandum, means the potential long-term risks to UK financial stability from increased reliance on these foreign entities have not been fully quantified.
Citation, commencement, extent and interpretation
- -(1) These Regulations may be cited as the Central Counterparties (Equivalence) Regulations 2026.
- (2) These Regulations come into force on 3rd August 2026.
- (3) These Regulations extend to England and Wales, Scotland and Northern Ireland.
- (4) In these Regulations-
'EMIR' means 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;
'relevant regulatory authority' means a regulatory authority, specified in the second column of the table in Part 1 of the Schedule, which is responsible for the authorisation and supervision of CCPs in the third country specified in the same row of the table;
'specified CCP' means a CCP( 2 ) specified in the third column of the table in Part 1 of the Schedule;
'specified overseas jurisdiction' means a third country specified in the first column of the table in Part 1 of the Schedule.
This section establishes the official title of the regulations and sets the commencement date for 3rd August 2026.
It specifies that the regulations apply throughout the United Kingdom, including England, Wales, Scotland, and Northern Ireland.
It also defines key terms such as 'EMIR' and points to the Schedule for the lists of specific countries, regulatory bodies, and central counterparties (CCPs) covered by the document.
Equivalence
- The Treasury specify that in respect of a specified overseas jurisdiction-
- (a) the legal and supervisory arrangements of the specified overseas jurisdiction as implemented by the relevant regulatory authority ensure that specified CCPs authorised in that jurisdiction comply on an ongoing basis with legally binding requirements which are equivalent to the requirements laid down in Title IV of EMIR (requirements for CCPs);
- (b) the specified CCPs are subject to effective supervision and enforcement on an ongoing basis by the relevant regulatory authority;
- (c) the legal framework of the specified overseas jurisdiction as implemented by the relevant regulatory authority provides for an effective equivalent system for the recognition of CCPs authorised under legal regimes of other countries.
This provision contains the Treasury's formal declaration of equivalence for the legal systems of the jurisdictions listed in the Schedule.
It confirms that these foreign systems impose legally binding requirements similar to those in the UK and provide effective supervision of their financial institutions.
Furthermore, it asserts that these jurisdictions have reciprocal systems for recognizing financial entities from other countries.
Schedule
Regulation 1
Overseas jurisdictions, regulatory authorities and CCPs specified for the purposes of regulation 2
Part 1
Specified overseas jurisdictions, relevant regulatory authorities and specified CCPs
| Specified overseas jurisdiction | Relevant regulatory authority | Specified CCP | |---|---|---| | Australia | Australian Securities and Investments Commission and the Reserve Bank of Australia | A CCP that is established in Australia which is regulated by the Australian Securities and Investments Commission and the Reserve Bank of Australia as an approved licensed domestic clearing and settlement facility. | | Hong Kong | Securities and Futures Commission | A CCP that is established in Hong Kong which is authorised by the Securities and Futures Commission as a recognised clearing house. | | India | Securities and Exchange Board of India | A CCP that is established in India which is regulated and supervised as a recognised clearing corporation by the Securities and Exchange Board of India. | | India | International Financial Services Centres Authority | ACCPthatisestablished in India which operates as a recognised clearing house and is regulated and supervised by the International Financial Services Centres Authority. | | Japan | Japanese Financial Services Authority | A CCP that is established in Japan which is licensed and supervised by the Japanese Financial Services Authority. | | Japan | Ministry of Agriculture, Forestry and Fisheries and Ministry of Economy Trade and Industry | A CCP that is established in Japan which is licensed and supervised by the Ministry of Agriculture, Forestry and Fisheries and Ministry of Economy Trade and Industry. | | South Africa | Financial Sector Conduct Authority, the Prudential Authority and | ACCP that is established in South Africa which is licensed and supervised by the Financial Sector Conduct Authority, the Prudential Authority and the South African Reserve Bank as a clearing house. | | United Emirates | Capital Market Authority | A CCP that is established in the United Arab Emirates which is licensed to undertake central clearing activities and is regulated by the Capital Market Authority. | | United Arab Emirates | Dubai Financial Services Authority | A CCP that is established in the United Arab Emirates which operates as a clearing house in or from the Dubai International Financial Centre and is regulated and supervised by the Dubai Financial Services Authority as an authorised market institution. | | United States of America | Securities and Exchange Commission | An SEC-registered CCP as defined in paragraph 1 of Part 2 to this Schedule, subject to paragraphs 2 and 3 of Part 2 to this Schedule. |
The Schedule identifies the specific countries and regulatory bodies that the UK Treasury deems equivalent.
It lists various national authorities, such as the Securities and Exchange Board of India and the Dubai Financial Services Authority, and defines which types of financial entities (CCPs) within those jurisdictions are included.
This list serves as the definitive reference for which foreign entities the Bank of England may recognize.
Part 2
Further provisions relating to the specification of the United States of America
- In this Schedule-
'regulated market' has the meaning given in Article 2(13) of MIFIR( 3 );
'Regulatory Technical Standards' means Commission Delegated Regulation (EU) 153/2013 of 19 December 2012 supplementing Regulation (EU) of the European Parliament and of the Council with regard to regulatory technical standards on requirements for central counterparties( 4 );
'SEC' means the Securities and Exchange Commission of the USA;
'SEC-registered CCP' means a CCP that is-
- (a) established in the USA, and
- (b) registered with the SEC as a clearing agency.
'USA' means the United States of America.
- An SEC-registered CCP specified in paragraph 3 is only specified for the purposes of regulation 2 where its internal rules and procedures include requirements equivalent to the following-
- (a) in relation to all derivative contracts( 5 ), at least one of the three options set out in paragraphs (a) to (c) of Article 28(1) (procyclicality) of the Regulatory Technical Standards,
- (b) in relation to derivative contracts executed on a regulated market, the requirement in Article 26(1)(b) (time horizons for the liquidation period) of the Regulatory Technical Standards, and
- (c) the requirement in Article 43(2) of EMIR (financial resources) relating to the default fund referred to in Article 42 and the other financial resources referred to in Article 43(1).
- The SEC-registered CCPs to which the condition in paragraph 2 applies are-
- (a) Fixed Income Clearing Corporation, the company registered with the SEC with Central Index Key 000123861.
- (b) ICE Clear Credit LLC, the company registered with the SEC with Central Index Key 0001559962.
This part sets forth additional conditions for specific United States entities, namely the Fixed Income Clearing Corporation and ICE Clear Credit LLC. For these entities to be considered equivalent, they must maintain internal rules that match UK standards on procyclicality (measures to prevent market volatility), liquidation time horizons, and the maintenance of default funds.
It also provides specific technical definitions used for the US context, referencing both UK and retained EU financial regulations.
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