These Regulations bring into force various revocations of assimilated law relating to financial services, specifically targeting sections of the Capital Requirements Regulation (Regulation (EU) No 575/2013).
They establish transitional and saving arrangements for central counterparties (CCPs), allowing certain entities to maintain their status as qualifying central counterparties (QCCPs) during specified periods.
The regulations apply to HM Treasury, credit institutions, investment firms, and CCPs operating within or seeking recognition in the United Kingdom.
Arguments For
The document states that the revocations are part of the broader implementation of the Financial Services and Markets Act 2023, which enables the removal of assimilated law (formerly EU law) from the UK statute book.
Proponents within the government argue via the Explanatory Note that transitional provisions are necessary to maintain regulatory continuity for central counterparties (CCPs) as the UK updates its domestic regulatory framework.
The regulations cite section 86 of the Financial Services and Markets Act 2023 as the legal basis for making these commencement and saving provisions.
The Explanatory Note indicates that the measures align with the Treasury's published policy strategy for updating the UK’s regulatory framework for CCPs.
Arguments Against
Legal practitioners might identify potential complexity in the overlapping timelines between the revocation of the Capital Requirements Regulation and the continued application of certain articles via saving provisions.
Financial institutions may face administrative burdens in tracking the different 'application days' and expiry periods for QCCP status under regulation 5.
Critics might argue that the reliance on future agency action—specifically Treasury regulations under Article 25(6) of EMIR—creates temporary uncertainty regarding the long-term status of third-country CCPs.
Citation, commencement and interpretation
- -(1) These Regulations may be cited as the Financial Services and Markets Act 2023 (Commencement No. 15 and Saving and Transitional Provisions) Regulations 2026.
(2) Except as provided for in paragraph (3), these Regulations come into force on the day after the day on which they are made.
(3) Regulation 3 comes into force on 1st January 2027.
(4) In these Regulations-
'the Capital Requirements Regulation' means Regulation (EU) No 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 (EU) No 648/2012;
'CCP' has the meaning given to 'central counterparty' in section 313(1) of the Financial Services and Markets Act 2000 (interpretation of Part XVIII);
'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;
'QCCP' means a CCP that is-
- (a) authorised in accordance with Article 14 of EMIR, or
- (b) recognised in accordance with Article 25 of EMIR.
This section establishes the official title of the regulations and provides the timeline for when different parts take effect.
It defines key technical terms, including the 'Capital Requirements Regulation' and 'EMIR' (European Market Infrastructure Regulation).
It also clarifies that a 'QCCP' (Qualifying Central Counterparty) refers to an entity authorized or recognized under specific articles of EMIR.
Provisions coming into force on 1st January 2027
- The following provisions of the Financial Services and Markets Act 2023 come into force on 1st January 2027-
- (a) section 1(1) (revocation of assimilated law relating to financial services and markets), so far as it relates to the provisions in paragraphs (b) to (d);
- (b) in Part 1 (assimilated direct principal legislation) of Schedule 1 (revocation of assimilated law relating to financial services), the revocation of the following provisions of the Capital Requirements Regulation-
- (i) Article 81 (minority interests that qualify for inclusion in consolidated Common Equity Tier 1 capital) to the extent that it is not already revoked;
- (ii) Article 82 (qualifying Additional Tier 1, Tier 1, Tier 2 capital and qualifying own funds) to the extent that it is not already revoked;
- (iii) Article 107(3) and (4) (approaches to credit risk);
- (iv) Article 114(7) (exposures to central governments or central banks);
- (v) Article 115(4) (exposures to regional governments or local authorities);
- (vi) Article 116(5) (exposures to public sector entities);
- (vii) Article 382(4)(b) (scope);
- (viii) Article 391 (definition of an institution for large exposures purposes);
- (ix) Article 497 (own funds requirements for exposures to CCPs);
- (c) in Part 2 (subordinate legislation) of Schedule 1, the revocation of regulation 11(5)(e) of the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 (saving for certain financial services legislation relating to Gibraltar);
- (d) in Part 3 (EU tertiary legislation etc) of Schedule 1, the revocation of Commission Implementing Decision of 12 December 2014 on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures according to Regulation (EU) No 575/2013 of the European Parliament and of the Council.
This section activates the revocation of specific parts of the Capital Requirements Regulation on January 1, 2027.
The affected articles concern capital tiering, credit risk assessments for public entities, and own fund requirements for exposures to central counterparties.
Additionally, it repeals specific Gibraltar-related financial regulations and an EU decision regarding third-country equivalence.
Amendment to the Financial Services and Markets Act 2023 (Commencement No. 10 and Saving Provisions) Regulations 2025
- In regulation 5 of the Financial Services and Markets Act 2023 (Commencement No. 10 and Saving Provisions) Regulations 2025 (saving provision relating to equivalence directions, regulatory decisions and applications), in paragraph (2)(a), at the end insert 'except for the Capital Requirements Regulation Equivalence Directions 2020'.
This provision modifies a prior commencement regulation from 2025.
It specifically removes the 'Capital Requirements Regulation Equivalence Directions 2020' from the list of regulations that were previously saved or preserved.
This ensures these 2020 directions expire or are superseded as part of the new regulatory framework.
Saving provision for CCPs treated as QCCPs before 1st January 2027 under Article 497 of the Capital Requirements Regulation
- -(1) This regulation applies to a CCP which, immediately before 1st January 2027, is treated as a QCCP by virtue of Article 497 of the Capital Requirements Regulation (own funds requirements for exposures to CCPs).
(2) A CCP to which this regulation applies continues, on and after 1st January 2027, to be treated as a QCCP during the period applicable under Article 497 as that Article had effect immediately before 1st January 2027.
(3) In paragraph (2), the reference to the period applicable under Article 497 includes a reference to that period as extended by regulations made by the Treasury under paragraph (3) of Article 497.
This regulation protects the status of central counterparties (CCPs) that were already recognized as 'qualifying' (QCCPs) before January 1, 2027.
It allows these entities to keep their status even after the revocation of Article 497.
The duration of this status is determined by the timelines established in the version of Article 497 that existed just prior to its revocation.
Transitional provision for CCPs treated as QCCPs where the CCPs apply for EMIR recognition on or after 1st January 2027
- -(1) This regulation applies to a CCP which, on or after 1st January 2027, makes an application for recognition under Article 25 of EMIR.
(2) On or after 1st January 2027, an institution may treat a CCP to which this regulation applies as a QCCP during the period-
- (a) beginning with the day on which the CCP made the application for recognition under Article 25 of EMIR ('application day'), and
- (b) ending in accordance with paragraph (3).
(3) For the purposes of paragraph (2), the period ends-
- (a) if EMIR regulations are in force on the application day, two years after the application day;
- (b) if no EMIR regulations are in force on the application day, on the earlier of the following-
- (i) two years after the day on which EMIR regulations come into force, or
- (ii) six years after the application day.
(4) In paragraph (3)-
- (a) the period of two years specified in sub-paragraph (a) includes the application day,
- (b) the period of two years specified in sub-paragraph (b)(i) includes the day on which EMIR regulations come into force, and
- (c) the period of six years specified in sub-paragraph (b)(ii) includes the application day.
(5) In this regulation-
'credit institution' has the same meaning as in section 417(1) (definitions) of the Financial Services and Markets Act 2000;
'EMIR regulations' means regulations which-
- (a) are or may be made by the Treasury under Article 25(6) of EMIR, and
- (b) relate to the country in which a CCP which applies for recognition under Article 25 of EMIR is established;
'institution' means-
- (a) a credit institution, or
- (b) an investment firm;
'investment firm' has the same meaning as in section 258A (investment firm) of the Banking Act 2009.
This section creates a bridge for CCPs that apply for official recognition after January 1, 2027.
It permits banks and investment firms to treat these pending applicants as 'qualifying' for a temporary period.
The duration of this treatment varies from two to six years depending on when the Treasury issues specific country-related recognition regulations.
Saving provision relating to article 497(2) of the Capital Requirements Regulation
- -(1) This regulation applies to a CCP which, on and after 1st January 2027, is treated as a QCCP by virtue of regulation 4 or 5.
(2) Despite its revocation brought into force by regulation 2, Article 497(2) of the Capital Requirements Regulation continues to have effect, on and after 1st January 2027, subject to the following modifications-
- (a) the reference to the expiration of the deadline in Article 497(1) is to be read as a reference to the end of the period specified in-
- (i) regulation 4(2) in the case of a CCP to which regulation 4 applies;
- (ii) regulation 5(3) in the case of a CCP to which regulation 5 applies;
- (b) the reference to a CCP referred to in Article 497(1) is to be read as a reference to a CCP to which regulation 4 or 5 applies;
- (c) the reference to Article 308(2) is to be read as a reference to Article 308(2) of the Counterparty Credit Risk (CRR) Part of the PRA Rulebook.
(3) In this regulation, 'PRA Rulebook' means the Rulebook published by the Prudential Regulation Authority containing rules made by that Authority under the Financial Services and Markets Act 2000 as that Rulebook has effect on the day on which these Regulations are made.
This provision ensures that certain secondary requirements of the revoked Article 497 remain in effect for CCPs covered by the transitional rules.
It updates the language of the old article to align with the new timelines and refers to the Prudential Regulation Authority (PRA) Rulebook.
This allows the PRA’s rules on counterparty credit risk to apply during the saving period.
Related
The Air Navigation (Restriction of Flying) (Newport, Wales) (No. 2) Regulations 2026
Restricted the flight of unmanned aircraft below 1,400 feet in Newport, Wales, on 26 June 2026.
Read MoreThe Enterprise Act 2002 (Part 9 Restrictions on Disclosure of Information) (Specification) Order 2026
Designated the Motor Fuel Price (Open Data) Regulations 2025 as a specified enactment to regulate the disclosure of information under the Enterprise Act 2002.
Read MoreThe Marine Licensing (Miscellaneous Provisions) (Amendment etc.) Order 2026
Expanded UK marine licensing requirements to include various activities conducted by UK persons or vessels in international waters and the high seas.
Read MoreThe Registration of Births, Deaths, Marriages and Civil Partnerships (Fees) (Amendment) Regulations 2026
Amended the 2016 Fees Regulations to update terminology and specify fee recipients for birth, death, and marriage registration services following the introduction of electronic registers.
Read More