The Central Counterparties (Transitional Provision) (Extension and Amendment) Regulations 2025 extend transitional periods in the Capital Requirements Regulation (CRR) and the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018.
These extensions, lasting 12 months, apply to third-country central counterparties and aim to prevent disruption to international and UK financial markets.
The extensions are deemed necessary and proportionate given exceptional circumstances.
Arguments For
Avoid disruption to international financial markets: Extending the transitional periods prevents immediate disruption to financial stability by allowing more time for adjustment to new regulatory frameworks.
Maintain UK financial stability: The extensions provide a buffer, preventing sudden shocks and preserving the UK's role in international finance.
Proportionate and necessary response: The regulations are justified based on the assessment of exceptional circumstances and the need to avoid disproportionate impacts on global financial markets.
Legal basis: The regulations are explicitly based on the powers conferred by Article 497(3) of Regulation (EU) 575/2013 and regulation 18(2) of the CCP Regulations.
Arguments Against
Regulatory uncertainty: Repeated extensions of transitional periods can create uncertainty for market participants, hindering long-term planning and investment.
Potential for regulatory arbitrage: Extended transitional periods may have unintended consequences, potentially promoting regulatory arbitrage.
Alternative approaches: Could alternative solutions mitigate disruption without requiring such extensions, such as targeted assistance for specific counterparties?
Implementation challenges: Maintaining and monitoring the extended transitional periods adds administrative burden to relevant authorities, such as the Bank of England.
- Citation, commencement and extent (1) These Regulations may be cited as the Central Counterparties (Transitional Provision) (Extension and Amendment) Regulations 2025. (2) These Regulations come into force on 28th November 2025. (3) These Regulations extend to England and Wales, Scotland and Northern Ireland.
This section details the title, effective date (November 28th, 2025), and geographic scope of the regulations.
The regulations apply across the UK.
- Extension of the transitional period for third-country central counterparties under Article 497 of Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation No 648/2012 In Article 497 (own funds requirements for exposures to CCPs) of Regulation (EU) 575/2013, the transitional period referred to in paragraph 1(b)(ii) is extended by 12 months so that it ends six years after the date of the submission of the application.
This section extends a transitional period within Article 497 of Regulation (EU) 575/2013.
This article concerns capital requirements for exposures to central counterparties (CCPs).
The extension adds 12 months to the existing timeframe, delaying the end of the transitional period to six years after an application for recognition is submitted.
- Amendment to the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 In regulation 18(1) (temporary deemed recognition period) of the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018, for “six years” substitute “seven years”.
This section amends Regulation 18(1) of the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018.
Specifically, it replaces the phrase “six years” with “seven years” in the temporary recognition period for overseas CCPs, effectively extending that period by one year.
Explanatory Note (This note is not part of the Regulations) These Regulations extend transitional provisions provided for in Regulation (EU) 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (the “Capital Requirements Regulation”) and the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (the “CCP Regulations”) as extended by: i) the Central Counterparties (Transitional Provision) (Extension and Amendment) Regulations 2022; ii) the Central Counterparties (Transitional Provision) (Extension and Amendment) Regulations 2023; and iii) the Central Counterparties (Transitional Provision) (Extension and Amendment) Regulations 2024. These Regulations extend the transitional provisions in relation to central counterparties which are established outside of the United Kingdom. Regulation 2 provides that the transitional period provided for in Article 497(1)(b)(ii) of the Capital Requirements Regulation is extended by 12 months. Article 497(1)(b)(ii) sets out this transitional period for overseas central counterparties which have applied to be recognised by the Bank of England after 27 June 2019. Accordingly, the transitional period will expire 6 years following the date on which an application for recognition was made by an overseas central counterparty. Regulation 3 amends regulation 18(1) of the CCP Regulations, which provides the temporary recognition period for overseas central counterparties within the temporary recognition regime established by those Regulations. It extends this temporary recognition period by 12 months. Accordingly, the temporary recognition period shall expire on 31 December 2027. A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen. A de minimis impact assessment is available from HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ and is published with the Explanatory Memorandum alongside this instrument at www.legislation.gov.uk
The explanatory note summarizes the regulations' purpose, which is to extend existing transitional provisions for overseas central counterparties (CCPs) under the CRR and the CCP Regulations, extending previously set deadlines.
The note explains the specific extensions made by Regulations 2 and 3.
It also notes that a full impact assessment wasn't deemed necessary due to minimal impact on sectors.
Further information is available from HM Treasury.
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