Article 49 — Review of models, stress testing and back testing — compare

1.A CCP shall regularly review the models and parameters adopted to calculate its margin requirements, default fund contributions, collateral requirements and other risk control mechanisms. It shall subject the models to rigorous and frequent stress tests to assess their resilience in extreme but plausible market conditions and shall perform back tests to assess the reliability of the methodology adopted. The CCP shall obtain independent validation, shall inform its competent authority and ESMA of the results of the tests performed and shall obtain their validation in accordance with paragraphs  1a, 1b, 1c, 1d and to 1e before adopting any significant change to the models and parameters.

1a.Where a CCP intends to adopt any significant changeAll changes to the models and parameters referred to in paragraph 1, it shall apply to the competent authority and ESMA for validation of that change. The CCPnot assessed under Article 49a shall enclose an independent validation of the intended change to its applications. The competent authority and ESMA shall each confirmbe assessed in accordance with the receipt of the complete application to the CCPprocedure laid down in this Article.

1b.Within 50 working days of the receipt of the complete applications, the competent authority and ESMAWhere a CCP intends to adopt any change to a model or parameter referred to in paragraph 1, it shall each conduct a risk assessmentsubmit an application for validation of such change in an electronic format via the significant change and submit their reports to central database. That application shall be immediately shared with the CCP’s competent authority, ESMA and the college established referred to in accordance with Article 18Article 18. The CCP shall enclose an independent validation of the intended change to its application.

1c.Within 30 working days of the receipt of the reports referred to in paragraph 1b, the college shall adopt a majority opinion in accordance with Article 19(3). Notwithstanding a provisional adoption in accordance with paragraph 1e, theThe CCP’s competent authority shall not adopt a decision granting or refusingand ESMA shall each assess, within 10 working days of the validationacknowledgement of significant changes to models and parameters until such an opinion has been adopted by the college, unlessreceipt of the application, whether the application contains the documents required and whether those documents contain all the college has not adopted that opinion within the deadlineinformation required pursuant to paragraph 5, point (d).

1d.Within 9040 working days of the receipt of the applications referred to in paragraph 1a, the competent authorityconcluding that all documents and ESMA shall each inform the CCP and each otherinformation have been submitted in writing, including a fully reasoned explanation, whether the validation has been granted or refused.accordance with paragraph 1c:

1e.The CCP may not adopt any significant change toWithin 10 working days of receipt of the models and parameters opinion of the college referred to in paragraph 1 before obtaining Article 18, or after the expiry of the validations by its deadline for providing that opinion, whichever is earlier, the CCP’s competent authority and ESMA. The competent authority shall each grant or refuse the validation, taking into account the reports referred to in agreement with ESMAparagraph 1d, first subparagraph of this Article, may allow for a provisional adoption of and that opinion, and shall inform each other in writing thereof, providing a fully reasoned explanation for the grant significant change of those models or parameters prior to their validations where duly justifiedrefusal. Where the CCP’s competent authority or ESMA has not validated the change, the validation shall be refused.

1f.The CCP’s competent authority shall inform the CCP, within the deadline referred to in paragraph 1e, whether the validations have been granted or refused and shall provide a fully reasoned explanation therefor.

1g.The CCP may not adopt any significant change to a model or parameter referred to in paragraph 1 before obtaining validation by both its competent authority and ESMA.

1h.Changes to parameters that are the result of applying a methodology that is part of a validated model, either due to external input or due to a regular review or calibration exercise, shall not be considered changes to models and parameters for the purpose of this Article and Article 49a.

1i.A change shall be considered significant where at least one of the following conditions is met:

2.A CCP shall regularly test the key aspects of its default procedures and take all reasonable steps to ensure that all clearing members understand them and have appropriate arrangements in place to respond to a default event.

3.A CCP shall publicly disclose key information on its risk-management model and assumptions adopted to perform the stress tests referred to in paragraph 1.

4.In order to ensure consistent application of this Article, ESMA shall, after consulting EBA, other relevant competent authorities and the members of the ESCB, develop draft regulatory technical standards specifying:

5.To ensure uniform conditions of application of this Article, ESMA shall, after consulting EBA, other relevant competent authorities andin close cooperation with the members of the ESCB, shall develop draft regulatory technical standards specifying the conditions under which changes to the models and parameters referred to in paragraph 1 are significant.further specify;

6.ESMA shall develop draft implementing technical standards to specify the electronic format of the application to be submitted to the central database for the validation referred to in paragraph 1b of this Article and Article 49a.