Revocation of retained EU law Transitional amendments Amendments to the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018
In financial markets, there are various processes that need to be performed to complete each transaction. These processes are performed by several different types of entity, many of which are collectively referred to as financial market infrastructure (FMI).
	Each type of FMI performs a vital function in supporting financial markets. This ranges from collecting data on financial transactions, to performing unique services to enable firms active in financial markets to meet their regulatory obligations.
	Central counterparties (CCPs) are a type of financial market infrastructure (FMI) used by firms to reduce certain risks that arise when entering into financial transactions with other parties, such as derivative transactions or buying and selling securities. CCPs sit between the buyers and sellers of financial contracts, providing assurance that the obligations under those contracts will be fulfilled. Instead of holding the contract with each other, the buyer and seller each hold their side of the contract with the CCP. The process of transacting through a CCP is known as "clearing".
	The European Market Infrastructure Regulation (EMIR) is the core EU legislation relating to CCPs. Following the end of the Transition Period, the EU Regulation forms part of retained EU law and is referred to as UK EMIR.
	Article 25 of UK EMIR establishes that an overseas CCP may provide clearing services to clearing members (or access trading venues) established in the UK where HM Treasury has made an equivalence decision in relation to the CCP’s home jurisdiction under Article 25(6), and the overseas CCP has been recognised by the Bank of England (the Bank). The Bank can only grant recognition to a CCP if the regulatory and supervisory frameworks of the CCP’s home jurisdiction have been declared, under Article 25(6), to be equivalent to that provided for in EMIR.
	When the UK left the EU, the Government did not incorporate into domestic UK law the equivalence decisions for CCPs that the EU had made under Article 25 of EMIR. Instead, to enable UK firms to continue to access overseas CCPs whilst equivalence and recognition assessments are taking place, HM Treasury established the Temporary Recognition Regime (TRR).
	The TRR is accompanied by a ‘run-off regime’, intended to ensure that CCPs that leave the TRR without gaining recognition from the Bank, and can slowly and safely unwind transactions with UK members before exiting the UK market. As it stands, under the run-off regime, the Bank can determine that a CCP that has left the TRR can continue to offer services to UK firms, as if it were recognised, for a period of up to one year.
	Remaining within the TRR requires CCPs to take a number of steps, including submitting an application for recognition to the Bank by 30 June 2022. While the majority of CCPs in the TRR did this, a small number did not apply for recognition by this deadline, or applied after the deadline, and have consequently entered the run-off regime. UK firms therefore stood to lose access to these CCPs at the end of June 2023 under the current arrangements.
	Part 5 of Schedule 2 to this Act allows the Bank to extend the length of a CCP’s run-off period from a maximum period of one year to a maximum period of 3 years and 6 months, and to determine that the run-off period for a CCP that has exited the run-off regime is to be treated as not having expired from the making of the determination onwards. The ability to provide for this extended period is intended to allow CCPs in the run-off regime who wish to apply for recognition to do so, and to ensure that the relevant CCPs can continue to offer services to UK firms during that period.