AUSTRALIA: Monitoring of the On-going Compliance with Recognition Conditions by Central Counterparties

Friday June 3 2016

In view of CCPs established in Australia having applied to ESMA for recognition as CCPS pursuant to EMIR and ASIC, the RBA and ESMA have signed a Memorandum of Understanding (MoU) regarding arrangements for cooperation related to ESMA’s monitoring of the on-going compliance by the Covered CCPs with the Recognition Conditions.

Under Article 25(6) of EMIR, the European Commission has adopted Commission Decision 2014/755/EU determining that the legal and supervisory arrangements of Australia ensure that Covered CCPs comply with legally binding requirements which are equivalent to the requirements of EMIR, that Covered CCPs are subject to effective supervision and enforcement in Australia on an on-going basis, and that the legal framework of Australia provides for an effective equivalent system for the recognition of CCPs under the legal regimes of third countries.

Article 25(2) of EMIR requires the establishment of cooperation arrangements as a precondition for ESMA to recognise CCPs established in Australia to provide clearing services to clearing members or trading venues established in the European Union.
Therefore, the purpose of the MoU in two-fold, namely to:

• ensure the fulfilment of the condition set out in Article 25(2)(c) of EMIR; and
• provide ESMA with adequate tools to monitor the on-going compliance by the Covered CCPs with the Recognition Conditions.

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