An amended temporary equivalence decision on the regulatory framework applicable to central counterparties in the U.K. and Northern Ireland has been published in the Official Journal of the European Union. The decision amends the existing EU equivalence decision, which applies from the date that the U.K. leaves the EU in the event that no withdrawal agreement has been agreed, and ends on March 30, 2020. The amended decision extends the period of equivalence to one year following a U.K. no-deal exit from the EU and will apply from December 24, 2019. It would not apply in the event that the Withdrawal Agreement is ratified by both sides.
The amendment has been made following the extension of the Brexit deadline to January 31, 2021. In light of this extension, the Commission has determined that the original equivalence expiration date of March 30, 2020 would not provide sufficient time for clearing members and clients to establish legal certainty and predictability in the event of a no-deal Brexit. The original decision was published alongside a similar equivalence decision for U.K. and Northern Ireland Central Securities Depositories. However, the CSD decision does not expire until March 30, 2021.
Following the extension of the U.K. CCP equivalence decision, the European Securities and Markets Authority has also extended its recognition decisions for the three U.K. CCPs for the same one-year period in the event of a no-deal Brexit. Under its amended decision, ESMA would recognize LCH Limited, ICE Clear Europe Limited and LME Clear Limited as equivalent to EU clearing houses for one year following a U.K. no-deal Brexit.