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Home > Financial Stability > Central counterparties: applications under Article 54(2) of MiFIR
 

Central counterparties: applications under Article 54(2) of MiFIR

Under Article 54(2) of the Markets in Financial Instruments Regulation (MiFIR), a central counterparty (CCP) supervised by the Bank of England may apply to us for permission to make use of transitional arrangements so that Article 35 MiFIR regarding non-discriminatory access to a CCP would not apply to the applicant in respect of exchange-traded derivatives, for a transitional period until 3 July 2020. A CCP minded to submit such an application to us should consider the following factors:

Timing of applications

Such applications may be submitted to us only if the European Commission has (as mandated by MiFIR Article 52(12)) submitted its report assessing the need to temporarily exclude exchange-traded derivatives from the scope of Article 35 and 36, and that report assesses that there is not a need to exclude exchange-traded derivatives.

Applications must be submitted before MiFIR comes into application on 3 January 2018. A prospective applicant may wish to contact us at an early stage to discuss the preparation, scheduling and practical aspects of an application.
 
Format of applications

You must apply to us in writing by emailing fmiinformation@bankofengland.co.uk. Applicants are advised to contact us at the same email address to discuss any arrangements required to transmit confidential information before such information is transmitted to us.
 
Content of applications

There is no prescribed template for this type of application by a CCP, but we expect any application of this type to contain sufficient and detailed evidence on at least the following:

  • A description of the exchange-traded derivatives clearing services provided by the CCP, including which trading venues are cleared for, details of the products cleared, average cleared volumes over an indicative period, current levels of open interest and delivery processes.
  • A description of the risk (or risks) that the access rights under Article 35 as regards exchange-traded derivatives would present to the orderly functioning of the CCP. This should include details of how each risk is specific to the CCP, the CCP’s assessment of the probability of the risk crystallising and its assessment of the impact of such crystallisation on the CCP’s ability to continue to operate in compliance with its regulatory requirements and within its existing risk appetite.
  • A discussion of the possible mitigation arrangements available to the CCP to address each risk identified above. This should identify potential arrangements the CCP or the trading venue could implement to mitigate the risk, and the CCP’s rationale for contending that implementation of such mitigation arrangements would either not be effective or would not be proportionate.
  • We may require applicants to provide further detail or clarification. We will discuss this with the applicant if required.