The European Commission on Thursday extended by one year, the current transitional regime regarding the capital requirements that EU banks and investment firms must maintain when exposed to non-EU central counterparties (‘CCPs’).
The transitional regime will continue to apply until 28 June 2022, according to a press release.
“Today’s decision gives us a bit more breathing space while we continue to work on equivalence decisions. It also gives EU banks and investment firms sufficient time to properly prepare for the possibility of higher capital charges. There will be no more extensions after this,” said EU Commissioner responsible for financial services, financial stability and Capital Markets Union, Mairead McGuinness.
The EU Commission stated this is the final extension possible under the Capital Requirements Regulation (‘CRR’).
Exposures to those non-EU CCPs which will not be recognised by ESMA by 28 June 2022 will no longer be eligible for lower capital requirements after that date.
Stakeholders should start preparing for this possibility.