COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE A path towards a stronger EU clearing system
Date: 2022-12-07
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: capital markets union, competitiveness, financial derivative, financial legislation, financial risk, financial stability, financial supervision, payment system

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 7.12.2022  COM(2022) 696 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE A path towards a stronger EU clearing system   
 
 
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE 
EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 

A path towards a stronger EU clearing system 

1.  INTRODUCTION 

A  safe,  robust  and  competitive  clearing  ecosystem  in  the  EU  is  essential  for  a  well-
functioning  Capital  Markets  Union  (CMU).  Central  clearing  supports  trading  in  capital 
markets:  when  trades  are  cleared  centrally,  a  central  counterparty  (CCP)  interposes  itself 
between the parties to a trade and becomes the buyer to every seller and the seller to every 
buyer,  guaranteeing  the  performance  of  the  contracts.  It  can  do  so  thanks  to  a  system  of 
guarantees  that  it  collects  from  the  parties.  Through  clearing,  each  party  has  a  single  net 
exposure  to  the  CCP  instead  of  a  complex  network  of  bilateral  exposures  to  individual 
counterparties. In this manner, CCPs increase market transparency and efficiency as well as 
reduce the risks in financial markets, especially for derivatives. CCPs play a key role in the 
clearing  ecosystem,  which  includes  both  entities  that  participate  directly  in  CCPs  (as 
“clearing members”), such as large banks and investment firms, and entities that participate 
in CCPs indirectly (i.e. through clearing members), such as investment funds, smaller banks, 
insurance  companies,  corporates.  If  clearing  does  not  function  efficiently,  financial 
institutions, companies and investors face more risks and higher costs. 

EU rules for clearing and CCPs are set out in the European Market Infrastructure Regulation 
(EMIR)1,  complemented  by  the  Regulation  establishing  a  framework  for  the  recovery  and 
resolution  of  CCPs.2  EMIR  provides  a  strong  framework  for  risk  management  and 
transparency in clearing markets. However, new challenges have arisen. 

First,  clearing  capacity  is  an  important  dimension  of  the  CMU:  that  is  why  the  EU 
needs  a  competitive  and  modern  clearing  system.  The  CMU  is  about  building  deep  and 
liquid  EU  capital  markets  that  can  serve  the  needs  of  EU  citizens,  businesses  and  financial 
institutions.  The  Commission  continues  to  implement  the  2020  CMU  Action  Plan.3 
Alongside this Communication, the Commission is adopting a legislative proposal to make it 
less  burdensome  for  companies  to  list  and  raise  capital  on  public  exchanges  (the  “Listing 
Act”).  The  Commission  is  also  putting  forward  a  proposal  to  harmonise  key  aspects  of 
corporate  insolvency  law,  tackling  one  of  the  most  important  obstacles  to  cross-border 
investments  within the EU. However, a  genuine  CMU needs to  rely on  competitive market 
infrastructures.  As part  of the CMU, the Commission has already proposed a review of the 
Markets  in  Financial  Instruments  Regulation4  and  of  the  regulatory  framework  for  central 

1   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, OJ L 201, 27.7.2012, p. 1. 

2   Regulation  (EU)  2021/23  of  the  European  Parliament  and  of  the  Council  of  16  December  2020  on  a 

framework for the recovery and resolution of central counterparties, OJ L 22, 22.1.2021, p. 1–102. 

3   Commission  Communication  ‘A  Capital  Markets  Union  for  people  and  businesses  –  New  Action  Plan’, 

COM/2020/590 final. 

4   Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  amending  Regulation  (EU)  No 
600/2014  as  regards  enhancing  market  data  transparency,  removing  obstacles  to  the  emergence  of  a 

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securities depositories.5 To strengthen the CMU, the EU also needs to reinforce its domestic 
clearing capacity. 

Second, the EU clearing ecosystem must be safe and resilient: EU supervision needs to be 
enhanced to ensure proper monitoring and control of cross-border risks within the EU coming 
with  increased  clearing  volumes.  To  build  resilience,  the  lessons  drawn  from  the  recent 
developments  in  energy  markets,  with  several  energy  companies  facing  liquidity  issues 
when using derivatives, need to be taken into account. These developments have illustrated 
that EMIR has to be enhanced so that the risks to the EU’s financial stability continue to be 
mitigated  in  light  of  new  challenges.  This  means  building  a  safe  and  robust  EU  clearing 
ecosystem, which is able to withstand economic shocks. Such an ecosystem which allows a 
wide range of  participants,  including energy  companies, to  hedge  their  risks  efficiently  and 
safely, to better predict margin calls and hence manage their liquidity needs more effectively. 

Third,  competitive,  well-developed  and  resilient  EU  CCPs  are  a  pre-condition  for  the 
EU’s  open  strategic  autonomy.  It  is  crucial  that  the  EU  remains  open  to  global  financial 
markets  in  order  to  attract  investors  and  support  the  global  competitiveness  of  European 
firms. At the same time, following the withdrawal of the United Kingdom from the EU, the 
vast  amounts  of  euro-denominated  contracts  cleared  at  UK  CCPs  entail  risks  for  the  EU 
financial stability and for the transmission and conduct of the EU’s monetary policy. Building 
robust clearing  capacity  in  the EU reduces  the  risks stemming from  excessive exposures to 
third-country CCPs. 

To  achieve  this,  on  7  December  2022  the  Commission  has  presented  legislative  proposals 
amending  EMIR  and  other  pieces  of  legislation  to  make  the  EU  a  more  attractive  cost-
efficient clearing hub and address potential vulnerabilities. The measures will impact both the 
supply and the demand of clearing services. They will help to expand the range of clearing 
solutions on offer from EU CCPs and enhance their liquidity, by incentivising more market 
participants to clear there. 

These  proposals  follow  extensive  consultations,  including  with  Members  of  the  European 
Parliament,  representatives  from  the  Member  States  and  their  authorities,  the  European 
Supervisory  Authorities  (ESAs),  the  European  Systemic  Risk  Board  (ESRB),  the  European 
Central Bank (ECB) and the Single Supervisory Mechanism (SSM), as well as a broad range 
of  industry  stakeholders.6  The  impacts  of  these  measures  do  not  depend  only  on  making 
legislative changes, but also on the engagement and commitment by all actors involved, both 
public  and  private.  Regulators  and  policymakers  can  set  the  conditions  for  an  enhanced 
clearing  landscape  in  the  EU.  But  ultimately  it  is  for  market  participants  to  take  up  the 
opportunities offered by  regulation.  Public authorities in the EU can also play an important 
role, leading by example and contributing to a safer, more resilient and competitive clearing 
ecosystem in the European Union. 

consolidated  tape,  optimising  the  trading  obligations  and  prohibiting  receiving  payments  for  forwarding 
client orders, COM/2021/727 final. 

5   Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  amending  Regulation  (EU)  No 
909/2014  as  regards  settlement  discipline,  cross-border  provision  of  services,  supervisory  cooperation, 
provision  of  banking-type  ancillary  services  and  requirements  for  third-country  central  securities 
depositories, COM/2022/120 final. 

6   In  2021  the  Commission  steered  a  working  group  on  the  opportunities  and  challenges  of  transferring 
derivatives  clearing  from  the  UK  to  the  EU  CCPs  and  in  2022  it  held  a  targeted  consultation,  as  well  as 
meetings with Member States’ representatives and with representatives of the European Parliament. 

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2.  A COMPETITIVE AND MODERN EU CLEARING SYSTEM 

a.  For CCPs 

CCPs are catalysts of financial stability and need to be able to respond to developments in the 
markets dynamically. EMIR established a robust framework for central clearing. But certain 
areas  of  the  current  supervisory  framework  have  proven  overly  complex.  The  supervisory 
approval  procedures  for launching new clearing  services and activities by  EU CCPs can be 
unnecessarily  long  and  burdensome,  hindering  the  launch  of  new  products  on  the  market. 
Changes  in  CCP  risk  models  face  similar  challenges.  It  should  not  take  years  to  approve  a 
new product,  and model changes need to be swift to reflect  changing market and economic 
circumstances. Delays in approvals increase costs and limit the competitiveness of EU CCPs, 
reducing the attractiveness of the EU as a place to do business. It is imperative, therefore, to 
remove these obstacles. 

Key  Actions:  The  legislative  proposal  amending  EMIR  introduces  new  procedures  the 
authorities  involved  in  EU  CCP  supervision  should  follow  to  approve  new  activities  or 
services  that  EU  CCPs  wish  to  offer,  as  well  as  changes  in  risk  models.  Documents  to  be 
provided  by  CCPs  in  their  applications  are  standardised  and  the  length  of  time  to  obtain 
approval is reduced to a few weeks. A new, short procedure for launching new activities and 
services without material changes to the business model of a CCP is also introduced. These 
reforms will considerably shorten the time it takes CCPs to bring a product to market or make 
a  substantial  model  change.  EU  CCPs  are  encouraged  to  make  the  most  of  potential 
opportunities  offered  by  a  new  framework,  including  by  broadening  their  product  range  to 
meet the demand of their clearing members and clients. 

b.  For financial sector participants 

Financial  participants  using  the  services  of  CCPs,  e.g.  investment  funds  and  insurance 
companies, should  also  benefit from reduced costs when using clearing services. Following 
the  post-2008  crisis  reforms  and  the  move  to  centralised  clearing,  adjustments  were  also 
made  in  the  banking  framework,  enabling  banks  to  benefit  from  a  preferential  capital 
treatment when they clear at an authorised or recognised CCP7 rather than engage in bilateral 
transactions.8 This makes sense because CCP clearing reduces counterparty credit risk. These 
changes  to  bank  prudential  rules  have  not,  however,  been  fully  mirrored  in  other  pieces  of 
financial sector legislation. The current  rules  on counterparty exposure limits for derivative 
transactions  in  the  UCITS  Directive9,  for  example,  do  not  fully  reflect  the  risk-reducing 
nature  of  central  clearing  for  investment  fund  managers.  Inconsistencies  exist  also  in  the 
Solvency II framework for insurers.10 

This lack of consistency has become more problematic as EU CCPs have started offering new 
ways of accessing clearing, which help funds and insurance companies. Under the Solvency 

7   An  authorised  CCP  is  a  CCP  established  in  a  Member  State  and  authorised  under  EMIR  (Art.  14).  A 
recognised  CCP  is  a  third-country  CCP  recognised  by  ESMA  to  provide  clearing  services  to  EU  clearing 
members and trading venues in accordance with EMIR (Art. 25). 

8   Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential 
requirements  for  credit  institutions  and  amending  Regulation  (EU)  No  648/2012,  OJ  L  176,  27.6.2013,  p. 
379 – 387. 

9   Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of 
laws,  regulations  and  administrative  provisions  relating  to  undertakings  for  collective  investment  in 
transferable securities (UCITS), OJ L 302, 17.11.2009, p. 32 – 96. 

10   Delegated Regulation (EU) 2015/35, OJ L 12, 17.1.2015, p. 1. 

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II  framework,  for  example,  the  CCP-related  exposures  of  insurance  companies  wishing  to 
become  direct  CCP  members  can  be  subject  to  higher  capital  requirements  than  where 
insurers  act  as  indirect  clearing  participants.  These  higher  capital  requirements  are  a 
disincentive  to  using  these  new  access  models.  Some  EU  pension  scheme  arrangements, 
which will come under a clearing obligation in June 2023, are starting or have already started 
using the new access models. The more actors involved in the system, the more liquidity and 
opportunities are available to transact. 

Key actions. In addition to the requirement of an active account at EU CCPs (see section 4), 
the legislative  proposals  adopted on 7 December  2022 amend the UCITS Directive  and the 
MMF Regulation11 to better reflect the risk-mitigation role of CCPs authorised in the EU or 
recognised by ESMA. As regards insurance companies, the Commission  intends to  address 
the  disadvantageous  prudential  treatment  insurers  face  if  they  become  a  direct  clearing 
member, in the context of the forthcoming revision of the relevant Delegated Regulation.12 

3.  A SAFE AND RESILIENT CLEARING ECOSYSTEM 

a.  Ensuring robust and joined-up supervision 

Developing  the  EU  clearing  ecosystem  may  lead  to  additional  risks  within  the  EU  due  to 
increased  clearing  volumes.  For  these  risks  to  be  properly  managed,  EU  CCPs  must  be 
subject to thorough supervision both at the national and the wider EU level. Indeed, given the 
central role of clearing in the EU financial system, risks stemming from supervisory failures 
extend beyond national boundaries. 

Recent  market  developments  have  also  confirmed  the  need  for  a  more  holistic  risk 
monitoring and control: CCPs stand in  the middle of a complex chain  of interdependencies 
and  central  clearing  is  not  just  the  business  of  CCPs  and  some  large  banks,  but  involves 
different types of economic actors in different Member States. Recent market developments 
have highlighted the need for better information  on the relationships  and  interdependencies 
across  the  entire  clearing  chain:  even  if  CCPs  are  robust,  liquidity  issues  of  market 
participants may result in vulnerabilities which must be identified and addressed. 

This  means  that  the  EU  must  reinforce  the  framework  for  the  authorities  to  work  together 
effectively on the ground, share knowledge and insights and develop a common supervisory 
culture  from  the  bottom-up.  An  ecosystem  where  the  monitoring  of  clearing  chains,  which 
run  across  Member  States  and  markets,  involves  EU  bodies.  This  is  particularly  true  for 
emergency situations13, where decisions need to be made with the full picture in mind, in the 
interest of the EU and Member State economies alike. 

These  objectives  can  be  achieved  by  building  on  the  EU’s  current  supervisory  system. 
Supervisory arrangements for CCPs were reformed in 2019: while national CCP supervisors 

11   Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money 

market funds, OJ L 169, 30.6.2017, p. 8 – 45. 

12   In  the  context  of  the  review  of  the  Solvency  II  Directive,  the  Commission  concluded  that  supplementing 
amendments to Delegated Regulation (EU) 2015/35 will be needed to reach all the objectives of the review 
(see COM(2021)580). Against this background, the Commission has launched discussions about the possible 
content of the amendments to Delegated Regulation (EU) 2015/35. 

13   Emergency situations include, e.g., situations impacting the CCP’s soundness or resilience, or developments 
in financial markets, which may have an adverse effect, e.g., on the stability of the financial system in the 
Member States where the CCP or one of its clearing members are established (see Art. 24 of the proposed 
Regulation). 

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retain final responsibility for the supervision of CCPs established on their territory, the role of 
ESMA has been made stronger by setting up a CCP Supervisory Committee composed of EU 
CCP supervisors, three independent members and central banks for certain discussions. The 
Supervisory Committee supervises systemic third-country CCPs, while for EU CCPs its role 
remains mostly that of promoting convergence. 

Key actions. The Commission legislative proposal further develops and strengthens the EU 
supervisory  framework,  including  by:  i)  establishing  joint  supervisory  teams  for  certain 
tasks, to set the basis for more cooperative supervision with a wider EU  perspective and to 
develop  supervisory  knowledge  and  experience  throughout  the  EU;  ii)  facilitating  the 
monitoring of cross-border risks to the EU throughout the clearing chain by EU authorities, 
such  as  the  ESAs,  ECB,  ESRB  and  the  SSM;  and  iii)  allowing  ESMA,  through  its  CCP 
Supervisory  Committee,  to  co-ordinate  common  responses  to  emergency  situations  on  the 
basis of up-to-date information. 

b.  A more robust framework for clearing commodity derivatives 

Commodity  derivatives  markets  allow  firms,  including  energy  producers,  suppliers  and 
distributors,  to  manage  risks  of  volatile  prices,  and  offer  longer-term  fixed  contracts  to 
customers. Over the summer, price spikes and extreme volatility in energy derivative markets 
have  led  to  liquidity  issues  for  energy  companies.  These  market  participants  have 
experienced pressures on liquidity because of higher margin calls linked to rising prices. As 
part  of  its  package  of  energy  emergency  measures,  the  Commission  has  proposed,  for 
example, to extend the list of assets that can be posted as collateral at EU CCPs.14 

Nevertheless,  beyond  the  emergency  measures,  recent  market  developments  have  already 
highlighted targeted areas for structural improvements of the EMIR framework. Indeed, the 
broader  implications  of  recent  market  dynamics  should  be  carefully  looked  at,  as  also 
suggested by ESMA in a recent letter to the Commission.15 Hedging of energy exposures has 
become more challenging for some participants, as commodity price volatility has increased 
and  CCPs  have  called  more  margins.  In  stress  scenarios,  margins  increase,  reflecting  the 
higher risks faced by market participants. In this manner, central clearing increases the need 
to  ensure proper liquidity management by all clearing participants, to  meet  margin  calls.  In 
addition,  recent  market  developments  have  brought  the  attention  to  the  way  non-financial 
firms,  such  as  corporates,  access  CCPs,  as  the  liquidity  strains  may  be  greater  in  case  a 
corporate accesses a CCP directly, without the intermediation of a financial clearing member 
such  as  a  bank.  The  EU  clearing  ecosystem  should  enable  EU  firms  to  hedge  their  risks 
efficiently  and  safely,  while  at  the  same  time  safeguarding  financial  stability.  In  this  way, 
central clearing can and will support the EU economy. 

14   Commission Communication  ‘Energy Emergency  - preparing, purchasing and protecting the EU together’, 

COM/2022/553 final. 

15   ESMA’s letter to the European Commission of 22 September 2022: 

https://www.esma.europa.eu/file/125192/download?token=6iK84Onz.  

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Key  actions.  The  legislative  proposal  amending  EMIR  enables  firms  to  get  a  better 
understanding of their future potential liquidity needs when clearing centrally by requiring 
margin models to be more transparent for all: it is easier for a firm to plan liquidity needs if 
it can understand what sort of margin calls it may face, particularly in a situation of stress. 
EU  CCPs  already  provide  tools  that  simulate  the  behaviour  of  margin  models.  This 
information should however be passed on through the clearing chain, as the liquidity needs 
arising  from  margin  calls  do  not  stop  at  the  level  of  the  clearing  member,  who  will 
therefore be required to clearly explain to their clients how margin calls work and provide 
simulations  under  different  scenarios.  The  legislative  proposal  amending  EMIR  also 
strengthens the requirements for participating in a CCP, to avoid that undue risks spill over 
to other clearing members. If non-financial firms have direct access to a CCP, they must be 
better equipped to fulfil their obligations. The legislative proposal  also takes into account 
ESMA’s recommendations to amend the methodology to determine the clearing threshold , 
making it easier to implement and more predictable. It also requires ESMA to review and 
clarify  the  conditions  for  a  transaction  to  be  considered  a  hedge  and  therefore  not  count 
towards the clearing threshold. 

4. A clearing ecosystem supporting the EU’s open strategic autonomy 

Clearing is a global business, and EU market players are active at several CCPs around the 
world. The work in the area of CCP equivalence over the last several years clearly shows the 
commitment of the EU to an open financial system that supports the international standards 
and cooperation. The Commission has adopted CCP equivalence decisions for more than 20 
jurisdictions, which allowed the EU market to open up to more than 40 third-country CCPs. 
This  means  opportunities  for  third-country  CCPs  and  opportunities  for  EU  market 
participants, which often accompany European firms to foreign markets. 

At the same time, “open strategic autonomy”16 means that the EU needs to be able to address 
risks to financial stability that can arise when EU market participants are excessively exposed 
to  third-country  entities,  as  this  can  be  a  source  of  vulnerability.  The  United  Kingdom,  in 
particular, plays a key role as a hub for central clearing: in the first half of 2021, 91% of all 
euro-denominated interest-rate swaps trades were cleared in the United Kingdom.17 

To mitigate the risks  arising from  the potential  abrupt interruption of access  by EU market 
participants to the UK CCPs following the withdrawal of the United Kingdom from the EU, 
the  Commission  adopted  temporary  equivalence  decisions  covering  the  regulatory  and 
supervisory  framework  for  those  CCPs.18  The  current  temporary  equivalence  decision 
covering the framework for CCPs in the United Kingdom expires on 30 June 2025.  

At  the  same  time,  the  Commission  has  urged  EU  market  participants  to  reduce  excessive 
exposures to such systemic infrastructures located in a third country, in light of the potential 
risks  in  a  stress  scenario.  Indeed,  in  case  of  stress,  excessive  reliance  of  EU  market 
participants  on  CCPs  established  in  third  countries  makes  it  difficult  for EU  regulators  and 

16   See Commission Communication ‘The European economic and financial system: fostering openness, 

strength and resilience’, COM/2021/32 final.  

17   See CEPS 2021, “Setting EU CCP policy - much more than meets the eye”. 
18   Commission  Implementing  Decision  (EU)  2018/2031  of  19  December  2018,  Commission  Implementing 
Decision  (EU)  2019/544  of  3  April  2019,  Commission  Implementing  Decision  (EU)  2019/2211  of  19 
December  2019,  Commission  Implementing  Decision  (EU)  2020/1308  of  21  September  2020  and 
Commission Implementing Decision (EU) 2022/174 of 8 February 2022. 

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supervisors to address the financial stability risks for the EU. As noted by ESMA19, in times 
of  crisis,  changes  to  the  eligible  collateral,  margins  or  haircuts  may  negatively  impact  the 
sovereign  bond  markets  of  one  or  more  Member  States,  and  more  broadly  EU  financial 
stability.  Disruptions  in  key  markets  relevant  for  EU  central  banks’  monetary  policies  may 
also hamper the transmission mechanism of those policies. In times of crisis, EU authorities 
would not be in the driving seat for taking the relevant decisions. 

It  is  important  to  prepare  for  high-risk  but  low-probability  events.  Increasing  clearing 
capacity  in  the  EU  and  strengthening  the  clearing  ecosystem  will  reduce  the  excessive 
exposures  of  EU  market  participants  on  third-country  CCPs  in  the  medium-term,  thus 
supporting the EU’s open strategic autonomy.20 

Key actions. The legislative proposal amending EMIR requires market participants subject to 
a clearing obligation to clear a portion of the products that have been identified by ESMA as 
of  substantial  systemic  importance  through  active  accounts  at  EU  CCPs.21  This  will 
contribute to reduce the financial stability risks posed by excessive exposure to third-country 
CCPs,  as  identified  by  ESMA.  To  complement  this  measure,  the  legislative  proposals  also 
amend  the  Capital  Requirements  Directive  and  the  Investment  Firm  Directive  to  enhance 
monitoring and treatment of concentration risk that may arise from exposures to CCPs.22 

The Commission is also proposing to simplify the equivalence assessment under EMIR when 
the risks involved in  clearing in a third country are particularly low. Experience has shown 
that there is room for making the equivalence framework in EMIR more proportionate and to 
better tailor cooperation with  foreign supervisors,  based on the different  magnitude of risks 
posed by CCPs in third countries – and without compromising on the need for third countries 
to have sound rules in place. 

5. THE ROLE OF PUBLIC AUTHORITIES 

To  develop  a  competitive  clearing  ecosystem,  supervisors,  central  banks,  other  authorities 
and public entities, both at national and EU level, have an important role to play. 

Public entities, e.g. public debt management offices, are exempt from the obligation to clear 
their derivatives at a CCP under EMIR. This is justified to allow these bodies to accomplish 
their mission in the public interest. Some public entities have chosen over the years to start 
centrally clearing their contracts on a voluntary basis. Central clearing brings with it greater 
safeguards  in  terms  of  counterparty  credit  risk,  improves  markets  liquidity  and  adds 
transparency.  The  Commission  strongly  encourages  public  authorities  in  the  EU  to  clear  at 
EU  CCPs,  should  they  decide  to  clear  and  where  the  products  sought  are  available.  On  its 
part,  the  Commission  commits  to  clearing  most  of  its  centrally-cleared  positions  at  an 
EU CCP, where the products sought are available. 

19   See  ESMA  report  of  December  2021:  https://www.esma.europa.eu/press-news/esma-news/esma-publishes-

results-its-assessment-systemically-important-uk-central.  

20   See  Commissioner  McGuinness  Statement 

forward 
https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_21_5905.  

the  way 

on 

for 

central 

clearing: 

21   Interest  rate  derivatives  denominated  in  euro  and  Polish  zloty,  short-term  interest  rate  futures  and  credit 

default swaps denominated in euro. 

22   The measures will give supervised entities (credit institutions and investment firms) an incentive to reduce 
excessive concentration risk by, for example, diversifying/scaling back their exposures. To the extent that a 
competent authority will consider that the actions taken by an entity it supervises are insufficient to reduce 
that risk, it will be able to impose supervisory measures. 

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The contribution by national public authorities can be useful in the area of accounting rules. 
There  are  some  uncertainties  around  the  application  of  certain  national  rules  in  the  area  of 
hedge  accounting23  which  could  in  practice  discourage  transfers  of  positions  from  a  third-
country  CCP  to  an  EU  CCP.  The  Commission  invites  national  authorities  to  look  at 
national  accounting  rules  and  remove  or  alleviate  any  obstacles  to  transferring 
exposures.24 

Central  banks  are  also  important  players.  The  Commission’s  public  consultation  in  early 
2022  highlighted  broad  support  by  stakeholders  for  further  advancements  in  European 
payment  systems,  more  specifically  TARGET2.  TARGET2  is  a  unique  payment  system, 
which works on a real-time, gross-settlement basis for its community of participants and is a 
key  infrastructure  supporting  the  euro.  A  number  of  market  participants,  both  banks  and 
CCPs, expressed the view that the operating hours of the system are too short, implying that 
some margins late in a business day are called by EU CCPs in foreign currencies such as the 
US dollar. According to market participants, this situation presents difficulties both for CCPs, 
which  need  to  be  able  to  invest  US  dollars  received  in  the  repo  market,  and  for  clearing 
members  and  clients,  which  are  requested  to  have  the  necessary  amount  of  US  dollars 
available  to  meet  the  margin  calls.  This  could  be  a  concern  particularly  in  times  of  stress, 
when  CCPs’  margin  calls  can  occur  at  later  hours  and  are  of  varying  amounts.  The 
Commission wants to avoid that EU market participants depend on foreign currency liquidity 
to  meet  margin  calls  by  EU  CCPs,  in  particular  in  times  of  stress.  The  Commission 
therefore  invites  banks  and  CCPs  to  engage  with  the  Eurosystem  on  these  topics  and 
discuss  all  possible  ways  of  using  the  system.  The  Commission  trusts  that  market 
participants, together with the Eurosystem, will examine the issues raised in the 2022 targeted 
consultation and find a solution to address them. 

Another aspect that was brought to the attention of the Commission is related to central bank 
access policies for CCPs regarding deposit and liquidity facilities. As shown by a 2018 report 
of  the  International  Monetary  Fund25,  the  Eurosystem  has  established  access  policies  for 
CCPs  in  general.  Due  to  the  multiplicity  of  such  access  policies,  the  IMF  made  some 
recommendation  to  the  ECB/Eurosystem  to  explore  potential  harmonisation  across  relevant 
access  policies  for  CCPs.  The  Eurosystem  is  looking  further  into  the  aforementioned 
issues.  It  is  noted that the access  policies with  respect  to  central  bank deposit and liquidity 
facilities fall within the Eurosystem’s mandate and tasks that are performed in line with the 
principle of independence of central banks. 

5. CONCLUSION 

The reforms after the 2008 global financial crisis have allowed EU financial markets to face 
recent market developments from a much more robust position than before 2008. A key piece 
of these reforms is central clearing. Central clearing is fundamental for trading and for well-
developed  capital  markets.  It  is  fundamental  in  building  the  CMU.  The  experience  of  the 

23   The  objective  of  hedge  accounting  is  to  represent  in  the  financial  statements  the  effect  of  an  entity’s  risk 
management activities that use financial instruments to manage exposures arising from particular risks that 
could affect profit or loss. 

24   The  Commission  stands  ready  to  provide  technical  support  to  Member  States  and  their  public  authorities, 
under  Regulation  (EU)  2021/240  of  the  European  Parliament  and  of  the  Council  of  10  February  2021,  to 
facilitate  public  authorities’  clearing  at  EU  CCPs,  in  case  they  decide  to  clear,  and  to  review  the  national 
accounting rules so as to remove or alleviate any obstacles to transferring exposures. 

25   IMF Country Report No. 18/226, July 2018: 

https://www.imf.org/~/media/Files/Publications/CR/2018/cr18226.ashx . 

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current  EU  framework  has  nevertheless  revealed  a  number  of  areas  where  improvement  is 
needed. 

One important aspect is to build a greater clearing capacity in the EU to strengthen our capital 
markets,  provide  our  firms  with  more  clearing  options  and  ensure  that  financial  stability  is 
preserved, while keeping the EU capital markets open. 

The revision of the EU clearing framework will also address issues that have emerged in the 
clearing of derivatives by energy firms, which are currently facing unprecedented shocks. A 
strong  clearing  system  allows  corporates  to  hedge  their  risks  efficiently  and  better  predict 
margin calls. But it is also one in which corporates are well-equipped to participate in central 
clearing, and are properly supervised when they do. 

The measures targeting CCPs and other aspects of the clearing system described above in this 
Communication  will  not  succeed  if  taken  in  isolation,  as  clearing  tends  to  concentration. 
They need to be accompanied by clear measures targeting the demand for clearing services 
and incentivising that demand to flow towards EU CCPs. Greater demand for clearing at EU 
CCPs will lead to greater liquidity at these CCPs. 

Finally,  a  stronger  EU  clearing  system  can  play  a  central  role  to  support  the  EU’s  open 
strategic autonomy. There cannot be open strategic autonomy if the EU does not develop its 
clearing capacity and address its vulnerabilities. This is also crucial for the EU to play fully 
its  role  in  the  global  context,  contributing  to  global  financial  stability  by  offering  more 
clearing options. 

This  package  of  measures  can  pave  the  way  for  a  stronger,  safer  and  more  competitive 
clearing ecosystem in the EU for years to come. In light of the importance of the package and 
considering  the  current  environment,  the  Commission  supports  swift  progress  by  the 
European Parliament and the Council towards the adoption of the measures and stands ready 
to facilitate the inter-institutional negotiations. Determined effort by all parties will be of the 
essence to achieve success. 

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