Updating the UK’s regulatory framework for central counterparties
The government has published two draft Statutory Instruments for technical comment, alongside an accompanying policy note.
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Central counterparties (CCPs) are a vitally important type of financial market infrastructure used by firms to reduce certain risks that arise when transacting on financial markets. They are essential to the ongoing stability and good functioning of not just UK, but global, financial markets.
In the Financial Services & Markets Act 2023, Parliament legislated to ensure that direct requirements on CCPs could be set by the Bank of England (Bank) through its rules. This meant that these requirements could be updated in an agile and responsive way to improve resilience and facilitate innovation.
Since then, in order to allow for the establishment of the Bank’s new rulebook for CCPs, the government has been working closely with the Bank on the revocation and replacement of relevant sections of the UK’s assimilated law framework for CCPs as set out in the UK’s European Market Infrastructure Regulation (UK EMIR).
The government is publishing two draft Statutory Instruments today for technical comment that will form part of the legislative package to deliver this.
The draft Central Counterparties (Amendment) Regulations 2025 are intended to accompany the future legislation revoking the relevant CCP provisions within UK EMIR and they restate elements of the UK EMIR framework where this is necessary.
The draft Financial Services and Markets Act 2000 (Criteria for Determining Systemic Importance of Overseas Central Counterparties) Regulations 2025 implement parts of the UK’s framework for overseas CCPs by setting out the criteria against which the Bank is to judge the systemic importance of an overseas CCP once relevant provisions of UK EMIR are revoked. These criteria have been designed to mirror the existing criteria set out in UK EMIR.
These Statutory Instruments, and the accompanying policy note, are intended to be considered alongside the Bank’s new CCP rulebook which will also be published for consultation shortly.