25(2c)(4)(4)On the basis of its assessment, ESMA shall recommend that the Commission adopt an implementing act confirming that that CCP should not be recognised to provide certain clearing services or activities.
25(2c)(4)(a)(a)that following the adaptation period specified by the Commission in accordance with point (b) of this subparagraph, some or all of the clearing services of that third-country CCP can only be provided to clearing members and trading venues established in the Union by that CCP after it has been authorised to do so in accordance with Article 14;
25(2c)(4)(b)(b)an appropriate adaptation period for the CCP, its clearing members and their clients. The adaptation period shall not exceed two years, and may only be extended once by an additional period of six months where the reasons for granting an adaptation period still exist;
25(2c)(4)(c)(c)the conditions under which that CCP may continue to provide certain clearing services or activities during the adaptation period referred to in point (b);
25(2c)(4)(d)(d)any measures that shall be taken during the adaptation period, in order to limit the potential costs to clearing members and their clients, in particular those established in the Union.
The Commission shall have a minimum of 30 working days to assess ESMA's recommendation.
After submission of the recommendation referred to in the second subparagraph, the Commission may, as a measure of last resort, adopt an implementing act specifying:
25(2c)(5)(5)In specifying the services and adaptation period referred to in points (a) and (b) of the fourth subparagraph, the Commission shall consider:
25(2c)(5)(a)(a)the characteristics of the services offered by the CCP and their substitutability;
25(2c)(5)(b)(b)whether and to what extent, outstanding cleared transactions shall be included within the scope of the implementing act, taking into account the legal and economic consequences of that inclusion;
25(2c)(5)(c)(c)the potential cost implications to clearing members and, where that information is available, their clients, in particular those established in the Union.
On the basis of its assessment, ESMA shall recommend that the Commission adopt an implementing act confirming that that CCP should not be recognised to provide certain clearing services or activities.
The Commission shall have a minimum of 30 working days to assess ESMA's recommendation.
After submission of the recommendation referred to in the second subparagraph, the Commission may, as a measure of last resort, adopt an implementing act specifying:
(a)that following the adaptation period specified by the Commission in accordance with point (b) of this subparagraph, some or all of the clearing services of that third-country CCP can only be provided to clearing members and trading venues established in the Union by that CCP after it has been authorised to do so in accordance with Article 14;
(b)an appropriate adaptation period for the CCP, its clearing members and their clients. The adaptation period shall not exceed two years, and may only be extended once by an additional period of six months where the reasons for granting an adaptation period still exist;
(c)the conditions under which that CCP may continue to provide certain clearing services or activities during the adaptation period referred to in point (b);
(d)any measures that shall be taken during the adaptation period, in order to limit the potential costs to clearing members and their clients, in particular those established in the Union.
In specifying the services and adaptation period referred to in points (a) and (b) of the fourth subparagraph, the Commission shall consider:
(a)the characteristics of the services offered by the CCP and their substitutability;
(b)whether and to what extent, outstanding cleared transactions shall be included within the scope of the implementing act, taking into account the legal and economic consequences of that inclusion;
(c)the potential cost implications to clearing members and, where that information is available, their clients, in particular those established in the Union.
The recognition decision shall be based on the conditions set out in paragraph 2 for Tier 1 CCPs and in paragraph 2, points (a) to (d) of paragraph 2, and paragraph 2b for Tier 2 CCPs. It shall be independent of any assessment as the basis for the equivalence decision as referred to in Article 13(3). Within 180 working days of the determination that an application is complete in accordance with the second subparagraph, ESMA shall inform the applicant CCP in writing, with a fully reasoned explanation, whether the recognition has been granted or refused.
Where the review is undertaken in accordance with point (b) of the first subparagraph of this paragraph, the CCP shall not be required to submit a new application for recognition but shall provide ESMA with all information necessary for ESMA to review its recognition. Where ESMA undertakes a review of the recognition of a CCP established in a third country in accordance with point (b) of the first subparagraph of this paragraph, ESMA shall not treat such review as an application for recognition for the relevant recognised CCP.
Where it is in the interests of the Union and considering the potential risks to the financial stability of the Union due to the expected participation of clearing members and trading venues established in the Union in CCPs established in a third country, the Commission may adopt the implementing act referred to in the first subparagraph irrespective of whether point (c) of that subparagraph is fulfilled.
25(7)7.ESMA shall establish effective cooperation arrangements with the relevant competent authorities of third countries whose legal and supervisory frameworks have been recognised as equivalent to this Regulation in accordance with paragraph 6. Such arrangements shall specify at least:
25(7)(a)(a)the mechanism for the exchange of information between ESMA, the central banks of issue referred to in point (f) of paragraph 3 and the competent authorities of the third countries concerned, including access to all information requested by ESMA regarding CCPs authorised in third countries, such as significant changes to risk models and parameters, extension of CCP activities and services, changes in the client account structure and in the use of payment systems that substantially affect the Union;
25(7a)7a.Where ESMA has not yet determined the tiering of a CCP or where ESMA has determined that all or some CCPs in a relevant third country are Tier 1 CCPs, the cooperation arrangements referred to in paragraph 7 shall take into account the risk that the provision of clearing services by those CCPs entails and shall specify:
25(7a)(a)(a)the mechanism for the exchange of information on an annual basis between ESMA, the central banks of issue referred to in paragraph 3, point (f), and the competent authorities of the third countries concerned, so that ESMA is able to:
25(7a)(a)(i)(i)ensure that the CCP complies with the conditions for recognition under paragraph 2;
25(7a)(a)(ii)(ii)identify any potential material impact on market liquidity or on the financial stability of the Union or of one or more of its Member States; and
25(7a)(a)(iii)(iii)monitor clearing activities in one, or more, of the CCPs established in such third country by clearing members established in the Union, or that are part of a group subject to consolidated supervision in the Union;
25(7a)(b)(b)exceptionally, the mechanism for the exchange of information on a quarterly basis requiring detailed information covering the aspects referred to in paragraph 2a, and in particular information on significant changes to risk models and parameters, the extension of CCP activities and services and changes in the client account structure, with the aim of detecting whether a CCP is potentially close to becoming or is potentially likely to become systemically important for the financial stability of the Union or of one or more of its Member States as well as the mechanism for the exchange of information on market developments that could have consequences for the financial stability of the Union;
25(7)(c)(c)the mechanism for prompt notification to ESMA by a third-country competent authority where a CCP it is supervising has been granted the right to provide clearing services to clearing members or clients established in the Union;
25(7)(d)(d)the procedures concerning the coordination of supervisory activities, including the agreement of third-country authorities to allow investigations and on-site inspections in accordance with Articles 25g and 25h respectively;
25(7a)(d)(d)the mechanism for prompt notification to ESMA by the third-country competent authority where a third-country CCP which is supervised by that competent authority intends to extend or reduce its clearing services or activities;
25(7)(f)(f)the procedures for third-country authorities to assure the effective enforcement of decisions adopted by ESMA in accordance with Articles 25b, 25f to 25m, 25p and 25q;
25(7)(g)(g)the procedures for third-country authorities to inform ESMA, the third-country CCP college referred to in Article 25c, and the central banks of issue referred to in point (f) of paragraph 3 without undue delay of any emergency situations relating to the recognised CCP, including developments in financial markets, which may have an adverse effect on market liquidity and the stability of the financial system in the Union or one of its Member States and the procedures and contingency plans to address such situations;
25(7a)(f)(f)the procedures for third-country authorities to inform ESMA, the third-country CCP college referred to in Article 25c, and the central banks of issue referred to in paragraph 3, point (f), without undue delay of any emergency situations relating to the recognised CCP, including developments in financial markets, which may have an adverse effect on market liquidity and the stability of the financial system in the Union or one of its Member States and the procedures and contingency plans to address such situations;
25(7a)(g)(g)the procedures for third-country authorities to assure the effective enforcement of decisions adopted by ESMA in accordance with Articles 25f, 25j, Article 25k(1), point (b), and Articles 25l, 25m and 25p;
Where ESMA considers that a third-country competent authority fails to apply any of the provisions laid down in a cooperation arrangement established in accordance with this paragraph, it shall inform the Commission thereof confidentially and without delay. In such a case, the Commission may decide to review the implementing act adopted in accordance with paragraph 6.
25(7b)7b.Where ESMA has determined that at least one CCP in a relevant third country is a Tier 2 CCP, the cooperation arrangements referred to in paragraph 7 shall specify in relation to those Tier 2 CCPs at least the following:
25(7b)(a)(a)the elements referred to in paragraph 7a, points (a), (c), (e), (f) and (h), where cooperation arrangements are not already established with the relevant third country pursuant to that paragraph;
25(7b)(b)(b)the mechanism for the exchange of information at least on a monthly basis, as appropriate, between ESMA, the central banks of issue referred to in paragraph 3, point (f), and the competent authorities of the third countries concerned, including access to all information requested by ESMA to ensure the CCP’s compliance with the requirements referred to in paragraph 2b;
25(7b)(c)(c)the procedures concerning the coordination of supervisory activities, including the agreement of third-country authorities to allow investigations and on-site inspections in accordance with Articles 25g and 25h respectively;
25(7b)(d)(d)the procedures for third-country authorities to assure the effective enforcement of decisions adopted by ESMA in accordance with Articles 25b, 25f to 25m, 25p and 25q;
25(7b)(e)(e)the procedures for third-country authorities to:
25(7b)(e)(i)(i)consult ESMA on the preparation and assessment of recovery plans and on the preparation of resolution plans in relation to aspects relevant for the Union or one or more of its Member States;
25(7b)(e)(ii)(ii)inform ESMA without undue delay of the establishment of recovery plans and resolution plans and any subsequent material changes to those plans in relation to aspects relevant for the Union or one or more of its Member States;
25(7b)(e)(iii)(iii)inform ESMA without undue delay if a Tier 2 CCP intends to activate its recovery plan or where the third-country authorities have determined that there are indications of an emerging crisis situation that could affect the operations of that Tier 2 CCP, in particular, its ability to provide clearing services or where the third-country authorities envisage taking a resolution action in the near future.
25(7c)7c.Where ESMA considers that a third-country competent authority fails to apply any of the provisions laid down in a cooperation arrangement established in accordance with paragraphs 7, 7a and 7b, it shall inform the Commission thereof confidentially and without delay. In such a case, the Commission may decide to review the implementing act adopted in accordance with paragraph 6.