A central counterparty (CCP) established in a third country may only provide clearing services to clearing members or trading venues established in the Union where that CCP is recognised by ESMA.

The recognition procedure for third country CCPs in accordance with Article 25 of EMIR has been amended as a result of Regulation (EU) 2019/2099. Third country CCPs that had been recognised before the amendments were therefore required to submit a new application for recognition to ESMA.

ESMA has established that the applications for recognition of six Indian CCPs must be refused since not all of the conditions set out in Article 25(2) of EMIR are met. ESMA published this decision on its website on 31 October 2022.

The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) has been closely monitoring the potential implications of this decision on clearing members located in Germany, while taking into account the requirements under section 30 (3) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG). At the present time, a small number of German clearing members of the Indian CCPs in question expect a significant impact on their Indian business activities.

BaFin intends to issue administrative orders in order to ensure compliance with the requirements under section 30 (3) of the WpHG as soon as possible but no later than 18 months following the date on which the relevant ESMA decisions enter into force, i.e. by 31 October 2024. BaFin will monitor the progress of the implementation of plans for remediation of compliance in a risk-based and timely manner.