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This Regulation lays down rules and procedures relating to the recovery and resolution of central counterparties (CCPs) authorised in accordance with OTC and rules relating to arrangements with third countries in the field of recovery and resolution of CCPs.

For the purposes of this Regulation the following definitions apply:

‘CCP’ means a CCP as defined in point (1) of Article 2 of OTC;

‘resolution college’ means the college established pursuant to Article 4;

‘resolution authority’ means an authority designated by a Member State in accordance with Article 3;

‘resolution tool’ means a resolution tool as set out in Article 27(1);

‘resolution power’ means any of the powers laid down in Articles 48 to 58;

‘resolution objectives’ mean the resolution objectives laid down in Article 21;

‘competent authority’ means an authority designated by a Member State in accordance with Article 22 of OTC;

‘default event’ means a scenario in which the CCP has declared in default:

one or more clearing members in accordance with the procedure set out in Article 48 of OTC; or

one or more interoperable CCPs in accordance with the relevant contractual arrangements or with the procedure set out in Article 52 of OTC;

‘non-default event’ means a scenario in which losses are incurred by a CCP for any reason other than a default event, including but not limited to, business, custody, investment, legal or operational failures or fraud, including failures resulting from cyber-attacks;

‘resolution plan’ means a resolution plan for a CCP drawn up in accordance with Article 12;

‘resolution action’ means a decision to place a CCP under resolution pursuant to Article 22, the application of a resolution tool, or the exercise of one or more resolution powers;

‘clearing member’ means a clearing member as defined in point 14 of Article 2 of OTC;

‘parent undertaking’ means a parent undertaking as defined in point (15)(a) of Article 4(1) of PRCIIFR;

‘third-country CCP’ means a CCP the head office of which is established in a third country;

‘set-off arrangement’ means an arrangement under which two or more claims or obligations owed between the CCP under resolution and a counterparty can be set off against each other;

‘financial market infrastructure’ or ‘FMI’ means a CCP, a central securities depository, a trade repository, a payment system or another system defined and designated by a Member State under point (a) of Article 2 of SFIPSSSD;

‘trading venue’ means a trading venue as defined in point 4 of Article 2 of OTC;

‘client’ means a client as defined in point 15 of Article 2 of OTC;

‘O-SIIs’ means other systemically important institutions as referred to in Article 131(3) of Directive 2013/36;

‘indirect client’ means an undertaking which has established indirect clearing arrangements with a clearing member within the meaning of the second subparagraph of Article 4(3) of OTC;

‘interoperable CCP’ means a CCP with which an interoperability arrangement has been established;

‘recovery plan’ means a recovery plan drawn up and maintained by a CCP in accordance with Article 9;

‘board’ means the administrative or supervisory board, or both, set up pursuant to national company law and in accordance with Article 27(2) of OTC;

‘supervisory college’ means the college referred to in Article 18(1) of OTC;

‘capital’ means capital as defined in point 25 of Article 2 of OTC;

‘default waterfall’ means default waterfall in accordance with Article 45 of OTC;

‘critical functions’ means activities, services or operations provided to third parties external to the CCP the discontinuance of which is likely to lead to the disruption of services that are essential to the real economy or to disrupt financial stability in one or more Member States due to the size, market share, external and internal interconnectedness, complexity or cross-border activities of a CCP, with particular regard to the substitutability of those activities, services or operations;

‘group’ means a group as defined in point 16 of Article 2 of OTC;

‘linked FMI’ means an FMI with which the CCP has entered into contractual arrangements, including interoperability arrangements;

‘extraordinary public financial support’ means State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union ( TFEU ), or any other public financial support at supra-national level, which, if provided for at national level, would constitute State aid, that is provided in order to preserve or restore the viability, liquidity or solvency of a CCP;

‘financial contracts’ means contracts and agreements as defined in point 100 of Article 2(1) of Directive 2014/59;

‘normal insolvency proceedings’ means collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator or an administrator normally applicable to CCPs under national law and either specific to those institutions or generally applicable to any natural or legal person;

‘instruments of ownership’ means shares, other instruments that confer ownership, instruments that are convertible into or give the right to acquire shares or other instruments of ownership, and instruments representing interests in shares or other instruments of ownership;

‘designated national macroprudential authority’ means the authority entrusted with the conduct of macroprudential policy referred to in Recommendation B1 of the Recommendation of the European Systemic Risk Board (ESRB) of 22 December 2011 on the macroprudential mandate of national authorities (ESRB/2011/3);

‘default fund’ means a default fund maintained by a CCP in accordance with Article 42 of OTC;

‘pre-funded resources’ means resources which are held by and freely available to the relevant legal person;

‘senior management’ means the person or persons who effectively direct the business of the CCP, and the executive member or members of the board;

‘trade repository’ means a trade repository as defined in point 2 of Article 2 of OTC or in point 1 of Article 3 of TSFTRR of the European Parliament and of the Council ( 19 ) ;

‘Union State aid framework’ means the framework established by Articles 107, 108 and 109 TFEU and regulations and all Union acts, including guidelines, communications and notices, made or adopted pursuant to Article 108(4) or Article 109 TFEU;

‘debt instruments’ means bonds or other forms of unsecured transferable debt, instruments creating or acknowledging a debt, and instruments giving rights to acquire debt instruments;

‘initial margin’ means margins collected by the CCP to cover potential future exposure to clearing members providing the margin and, where relevant, interoperable CCPs in the interval between the last margin collection and the liquidation of positions following a default of a clearing member or of an interoperable CCP;

‘variation margin’ means margins collected or paid out to reflect current exposures resulting from actual changes in market prices;

‘resolution cash call’ means a request for cash resources to be provided by clearing members to the CCP, additional to pre-funded resources, based on statutory powers available to a resolution authority in accordance with Article 31;

‘recovery cash call’ means a request for cash resources, other than a resolution cash call, to be provided by clearing members to the CCP, additional to pre-funded resources, based on contractual arrangements laid out in the operating rules of the CCP;

‘transfer powers’ means the powers specified in point (c) and (d) of Article 48(1) to transfer shares, other instruments of ownership, debt instruments, assets, rights, obligations or liabilities, or any combination of those items from a CCP under resolution to a recipient;

‘derivative’ means a derivative as defined in point 5 of Article 2 of OTC;

‘netting arrangement’ means an arrangement under which a number of claims or obligations can be converted into a single net claim, including a close-out netting arrangement under which, on the occurrence of an enforcement event (however or wherever defined), the obligations of the parties are accelerated so as to become immediately due or are terminated, and in either case are converted into or replaced by a single net claim, including a close-out netting provision as defined in point (n)(i) of Article 2(1) of FCAD of the European Parliament and of the Council ( 20 ) and netting as defined in point (k) of Article 2 of SFIPSSSD;

‘crisis prevention measure’ means the exercise of powers to require a CCP to take measures to remedy deficiencies in its recovery plan under Article 10(8) and (9), the exercise of powers to address or remove impediments to resolvability under Article 16, or the application of an early intervention measure under Article 18;

‘termination right’ means a right to terminate a contract, a right to accelerate, close out, set-off or net obligations or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract or a provision that prevents an obligation under the contract from arising that would otherwise arise;

‘title transfer financial collateral arrangement’ means a title transfer financial collateral arrangement as defined in point (b) of Article 2(1) of FCAD;

‘covered bond’ means a covered bond as defined in point (1) of Article 3 of ICBCBPSD of the European Parliament and of the Council ( 21 ) ;

‘third-country resolution proceedings’ means an action under the law of a third country to manage the failure of a third-country CCP that is comparable, in terms of objectives and anticipated results, to resolution actions under this Regulation;

‘relevant national authorities’ means the resolution authorities, competent authorities or competent ministries designated in accordance with this Regulation or pursuant to Article 3 of Directive 2014/59 or other authorities in Member States with powers in relation to assets, rights, obligations or liabilities of third-country CCPs providing clearing services in their jurisdiction;

‘relevant third-country authority’ means a third-country authority responsible for carrying out functions comparable to those of resolution authorities or competent authorities pursuant to this Regulation.

Each Member State shall designate one or more resolution authorities that are empowered to apply the resolution tools and exercise the resolution powers as set out in this Regulation.
Resolution authorities shall be national central banks, competent ministries, public administrative authorities or other authorities entrusted with public administrative powers.

Resolution authorities shall have the expertise, resources and operational capacity to apply resolution measures and exercise their powers with the speed and flexibility that are necessary to achieve the resolution objectives.

Where a resolution authority designated pursuant to paragraph 1 of this Article is entrusted with other functions, adequate structural arrangements shall be in place to avoid conflicts of interest between the functions entrusted to the resolution authority pursuant to this Regulation and all other functions entrusted to that authority. In particular, arrangements shall be put in place to ensure effective operational independence, including separate staff, reporting lines and decision making process of that resolution authority, from any tasks that the resolution authority may perform pursuant to Article 22 of OTC as a competent authority of the CCP and from the tasks that the resolution authority may perform as the competent authority of the clearing members referred to in point (c) of Article 18(2) of OTC.

The requirements expressed in paragraph 3 shall not preclude that reporting lines converge at the highest level of an organisation that subsumes different functions or authorities, or that, staff may, under predefined conditions, be shared between the other functions entrusted to the resolution authority to meet temporarily high workloads, or for the resolution authority to be able to avail itself of the expertise of shared staff.

Authorities exercising supervision and resolution functions under OTC and this Regulation, and persons exercising those functions on their behalf, shall cooperate closely in the preparation, planning and application of resolution decisions, both where the resolution authority and the competent authority are separate entities and where the functions are carried out by the same entity.

Resolution authorities shall adopt and make public the internal rules they have in place to ensure compliance with the requirements set out in paragraph 3, including rules regarding professional secrecy and information exchanges between the different functional areas.

Member States where no CCP has been established may derogate from the requirements set out in paragraph 3, except with regards to arrangements to avoid conflicts of interest.

Each Member State shall designate a single ministry which shall be responsible for exercising the functions entrusted to the competent ministry pursuant to this Regulation.

Where the resolution authority in a Member State is not the competent ministry, the resolution authority shall inform the competent ministry without undue delay of the decisions taken pursuant to this Regulation and, unless otherwise laid down in national law, obtain its approval before implementing decisions that will have a direct fiscal impact or systemic implications that are likely to lead to a direct fiscal impact.

Member States shall notify the Commission and the European Supervisory Authority (European Securities and Markets Authority) (ESMA), established by ESAESMAR, of the resolution authorities designated pursuant to paragraph 1.

Where a Member State designates more than one resolution authority pursuant to paragraph 1, the notification referred to in paragraph 10 shall include the following:

the reasons justifying that multiple designation;

the allocation of functions and responsibilities between those authorities;

the way in which coordination between them is ensured; and

the resolution authority designated as the contact authority for the purposes of cooperation and coordination with the relevant authorities of other Member States.

ESMA shall publish a list of the resolution authorities and the contact authorities notified pursuant to paragraph 10.

The resolution authority of the CCP shall establish, manage and chair a resolution college to carry out the tasks referred to in Articles 12, 15 and 16, and ensure cooperation and coordination with the authorities that are members of the resolution college and, where appropriate, cooperation with third-country competent authorities and resolution authorities.
Resolution colleges shall provide a framework for resolution authorities and other relevant authorities to perform the following tasks:

exchange information relevant for drawing up resolution plans, including for taking into consideration the systemic impact of the implementation of the resolution plan, for the application of preparatory and preventative measures and for resolution;

draw up resolution plans pursuant to Article 12;

assess the resolvability of CCPs pursuant to Article 15;

identify, address and remove impediments to the resolvability of CCPs pursuant to Article 16; and

coordinate public communication about resolution plans and strategies.

The following shall be members of the resolution college:

the resolution authority of the CCP;

the competent authority of the CCP;

the competent authorities and the resolution authorities of the clearing members referred to in point (c) of Article 18(2) of OTC, including, where relevant, the European Central Bank (ECB) in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Council Regulation 2013/1024 ( 22 ) and the Single Resolution Board (SRB) in its role as a resolution authority of credit institutions within the single resolution mechanism conferred upon it in accordance with Regulation 2014/806;

the competent authorities and the resolution authorities of clearing members, other than those referred to in point (c). Those competent authorities and resolution authorities shall inform the resolution authority of the CCP and justify their participation in the college based on their assessment of the impact that the CCP’s resolution could have on the financial stability of their respective Member State;

the competent authorities or the resolution authorities of clearing members’ clients, provided that the college does not already have a member from their own Member State in accordance with points (c), (d), (f), (g) or (h). Those authorities shall inform the resolution authority of the CCP and justify their participation in the college based on their assessment of the impact that the CCP’s resolution could have on the financial stability of their respective Member State;

the competent authorities referred to in point (d) of Article 18(2) of OTC;

the competent authorities and the resolution authorities of the CCPs referred to in point (e) of Article 18(2) of OTC;

the competent authorities referred to in point (f) of Article 18(2) of OTC;

the members of the European System of Central Banks (ESCB) referred to in point (g) of Article 18(2) of OTC;

the central banks of issue referred to in point (h) of Article 18(2) of OTC;

the central banks of issue of the Union currencies of the financial instruments cleared by the CCP, other than those referred to in point (j). Those central banks of issue shall inform the resolution authority of the CCP and justify their participation in the college based on their assessment of the impact that the CCP’s resolution could have on their respective currency of issue;

the competent authority of the parent undertaking, where applicable;

the competent ministry, where the resolution authority referred to in point (a) is not the competent ministry;

ESMA; and

the European Supervisory Authority (European Banking Authority) (EBA), established by ESAEBAR.

ESMA, EBA and the authorities referred to in points (d), (e), (k) and (l) of paragraph 2 shall not have voting rights in resolution colleges.
Where the ECB is a member of the college pursuant to points (c) and (j) of paragraph 2, it shall have two votes in the college.

The competent authorities and resolution authorities of clearing members established in third countries and the competent authorities and resolution authorities of third-country CCPs with which the CCP has established interoperability arrangements may be invited to participate in the resolution college as observers. Their attendance shall be conditional on those authorities being subject to confidentiality requirements equivalent, in the opinion of the resolution authority of the CCP as the chair of the resolution college, to those laid down in Article 73.
The participation of third-country authorities in the resolution college may be limited to the discussion of select cross-border enforcement issues, which may include the following:

effective and coordinated enforcement of resolution actions, in particular in accordance with Articles 53 and 77;

identification and removal of possible impediments to effective resolution action that may stem from divergent laws governing collateral, netting and set-off arrangements and different recovery and resolution powers or strategies;

identification and coordination of any need for new licensing, recognition or authorisation requirements, considering the need for resolution actions to be carried out in a timely fashion;

possible suspension of any clearing obligation for the relevant asset classes affected by the resolution of the CCP pursuant to Article 6 a of OTC or to any equivalent provision under the national law of the third country concerned;

possible influence of different time-zones on the applicable close of business hours regarding the end of trading.

The resolution authority of the CCP as the chair of the resolution college shall be responsible for the following tasks:

establishing written arrangements and procedures for the functioning of the resolution college, after consulting the other members of the resolution college;

coordinating all activities of the resolution college;

convening and chairing all meetings of the resolution college;

keeping all members of the resolution college fully informed in advance of the organisation of meetings, of the main issues to be discussed in those meetings and of the items to be considered for the purposes of those discussions;

deciding whether and which third-country authorities are invited to attend particular meetings of the resolution college in accordance with paragraph 4;

enabling, promoting and coordinating the timely exchange of all relevant information between members of the resolution college; and

keeping all members of the resolution college informed, in a timely manner, of the decisions and outcomes of those meetings.

In order to facilitate the performance of the tasks assigned to the college, members of the college referred to in paragraph 2 shall be entitled to contribute to the setting of the agenda of the college meetings, in particular by adding points to the agenda of the meeting.

In order to ensure the consistent and coherent functioning of resolution colleges across the Union, ESMA shall develop draft regulatory technical standards in order to specify the content of the written arrangements and procedures for the functioning of the resolution colleges referred to in paragraph 1.
For the purposes of preparing those regulatory standards, ESMA shall take into account the relevant provisions of the delegated acts adopted on the basis of Article 88(7) of Directive 2014/59.
ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

ESMA shall create a resolution committee (the ‘ESMA Resolution Committee’) pursuant to Article 41 of ESAESMAR for the purpose of preparing the decisions entrusted to ESMA in this Regulation, except for the decisions to be adopted pursuant to Article 11 of this Regulation.
The ESMA Resolution Committee shall also promote the drawing up and coordination of resolution plans and develop methods for the resolution of failing CCPs.

The ESMA Resolution Committee shall be composed of the authorities designated pursuant to Article 3(1).
Authorities referred to in points (i) and (v) of Article 4(2) of ESAEBAR shall be invited to participate in the ESMA Resolution Committee as observers.

For the purposes of this Regulation, ESMA shall cooperate with the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA) established by Regulation 2010/1094 of the European Parliament and of the Council ( 23 ) and EBA within the framework of the Joint Committee of the European Supervisory Authorities established under Article 54 of ESAEBAR, Article 54 of Regulation 2010/1094 and Article 54 of ESAESMAR.

For the purposes of this Regulation, ESMA shall ensure structural separation between the ESMA Resolution Committee and other functions referred to in ESAESMAR.

Competent authorities, resolution authorities and ESMA shall cooperate closely for the purposes of this Regulation. In particular, during the recovery phase, the competent authority and the members of the supervisory college should cooperate and communicate effectively with the resolution authority, to enable the resolution authority to act in a timely manner.

The resolution authority of a CCP and the resolution authorities of its clearing members shall cooperate closely with the aim of ensuring that there are no impediments to resolution.

Competent authorities and resolution authorities shall cooperate with ESMA for the purposes of this Regulation in accordance with ESAESMAR.
Competent authorities and resolution authorities shall, without delay, provide ESMA with all the information necessary to carry out its duties in accordance with Article 35 of ESAESMAR.

Competent authorities, resolution authorities and ESMA shall take account of all the following principles and aspects when making decisions and taking action pursuant to this Regulation:

the effectiveness and proportionality of any decision or action in relation to an individual CCP are ensured, taking into account at least the following factors:

the CCP’s legal form, ownership and organisational structure, including, where applicable, any interdependencies within the group to which the CCP belongs;

the nature, size and complexity of the CCP’s business, in particular the size, structure and liquidity in stressed conditions of the markets it serves;

the structure, nature and diversity of the CCP’s clearing membership, as well as, to the extent the information is available, of its clearing members’ network of clients and indirect clients;

the substitutability of the CCP’s critical functions in the markets it serves;

the CCP’s interconnectedness with other FMIs, trading venues, financial institutions and with the financial system in general;

whether the CCP clears any OTC derivative contract pertaining to a class of OTC derivatives that has been declared subject to the clearing obligation in accordance with Article 5(2) of OTC; and

the actual or potential consequences of the infringements referred to in Articles 18(1) and 22(2).

the imperatives of efficacy, of timeliness, of due urgency of decision-making, when required, and of keeping costs as low as possible are observed when decisions are made and action is taken, while at the same time ensuring that market disruption is mitigated to the greatest extent possible;

the use of extraordinary public financial support is avoided to the greatest extent possible, such support is available and used only as a last resort and in accordance with the conditions laid out in Article 45, and no expectation of public financial support is created;

resolution authorities, competent authorities and other authorities cooperate with each other to ensure that decisions are made and action is taken in a coordinated and efficient manner;

the roles and responsibilities of relevant authorities within each Member State are defined clearly;

the interests of the Member States where the CCP provides services and where its clearing members, and to the extent the information is available, their clients and indirect clients, including where those clients or indirect clients are designated by Member States as O-SIIs, and any linked FMIs, including interoperable CCPs, are established, and in particular the impact of any decision or action or inaction on the financial stability or fiscal resources of those Member States and the Union as a whole;

resolution authorities and resolution colleges cannot require Member States to provide extraordinary public financial support, nor impinge on the budgetary sovereignty and fiscal responsibilities of Member States;

the interests of affected clearing members, and to the extent the information is available, their clients and indirect clients, creditors and other stakeholders of the CCP in the Member States involved need to be balanced by avoiding unfairly prejudicing or unfairly protecting the interests of particular actors and avoiding unfair burden allocation within and across Member States;

any obligation under this Regulation to consult an authority before any decision or action is taken implies at least an obligation to consult on those elements of the proposed decision or action which have or which are likely to have an effect on the clearing members, clients, linked FMIs or trading venues or an impact on the financial stability of the Member State where the clearing members, clients, linked FMIs or trading venues are established or located;

where an authority raises an issue concerning the financial stability of its Member State, the resolution authority and the resolution college of the CCP consider it thoroughly and if they do not take the concerns expressed into account, explain in writing the reasons for not doing so;

resolution plans referred to in Article 12 are complied with unless, taking into account the circumstances of the case, deviation from those plans is necessary in order to better achieve the resolution objectives;

transparency is ensured towards the relevant authorities wherever possible, and in any case where a proposed decision or action is likely to have implications on the financial stability or fiscal resources of any relevant Member State;

they coordinate and cooperate as closely as possible, also with the goal to lower the overall cost of resolution; and

the following are kept to a minimum, to the extent possible: negative economic and social effects, including negative impacts on financial stability, of any decision on all the Member States where the CCP provides services and where its clearing members, and to the extent the information is available, their clients and indirect clients, including where those clients or indirect clients are designated by Member States as O-SIIs, and any linked FMIs, including interoperable CCPs, are established.

Resolution authorities, competent authorities and ESMA shall, on their own initiative or on request, provide each other in a timely manner with all the information relevant for the exercise of their tasks under this Regulation.

By way of derogation from paragraph 1, the resolution authorities shall only divulge confidential information provided by a third-country authority where that authority has given its prior written consent.

Resolution authorities shall provide the competent ministry with all information relating to decisions or measures that require notification, consultation or consent of that ministry.

CCPs shall draw up and maintain a recovery plan providing for measures to be taken in the case of both default and non-default events and combinations of both, in order to restore their financial soundness, without any extraordinary public financial support, and allow them to continue to provide critical functions following a significant deterioration of their financial situation or a risk of breaching their capital and prudential requirements under OTC.

The measures included in the recovery plan shall:

comprehensively and effectively address all the risks identified in the different scenarios, including possible uncovered liquidity shortfalls;

in the case of losses due to a default event, ensure the re-establishment of a matched book and the full allocation of uncovered losses to clearing members, and to their clients if those clients are direct creditors of the CCP, and to shareholders, taking into account the interests of all stakeholders;

include loss-absorbing arrangements that are adequate to cover the losses that might arise from all types of non-default events; and

enable the replenishment of the CCP’s financial resources, including its own funds, to a level sufficient in order for the CCP to meet its obligations under OTC and to support the continued and timely operation of the critical functions of the CCP.

The recovery plan shall include a framework of indicators based on the risk profile of the CCP, that identify the circumstances under which measures in the recovery plan are to be taken. The indicators may be of either a qualitative or a quantitative nature relating to the financial soundness and operational viability of the CCP and should enable recovery measures to be taken early enough to provide sufficient time for the plan to be implemented.

CCPs shall put in place appropriate arrangements for the regular monitoring of the indicators referred to in paragraph 3. CCPs shall report to their competent authorities on the outcome of that monitoring. Competent authorities shall transmit information to the supervisory college, where they deem such information significant.

ESMA shall, in cooperation with the ESRB, by 12 February 2022, issue guidelines in accordance with Article 16 of ESAESMAR to specify the minimum list of qualitative and quantitative indicators referred to in paragraph 3 of this Article.

CCPs shall include provisions in their operating rules, outlining the procedures to be followed by them where, in order to achieve the goals of the recovery process, they propose to:

take measures provided for in their recovery plan despite the fact that the relevant indicators have not been met; or

refrain from taking measures provided for in their recovery plan despite the fact that the relevant indicators have been met.

Any decision taken pursuant to this paragraph and its justification shall be notified to the competent authority without delay.

Where a CCP intends to activate its recovery plan, it shall notify the competent authority of the nature and magnitude of the problems it has identified, setting out all relevant circumstances and indicating the recovery measures or other measures it intends to take to address the situation as well as the envisaged time-frame to restore its financial soundness by use of those measures.
Where the competent authority considers that a recovery measure that the CCP intends to take may cause significant adverse effects to the financial system or is unlikely to be effective, it may require the CCP to refrain from taking that measure.
Following the notification received under the second subparagraph of paragraph 6 of this Article, the competent authority shall immediately assess whether the circumstances require the use of early intervention powers in accordance with Article 18.

The competent authority shall promptly inform the resolution authority and the supervisory college, and the resolution authority shall promptly inform the resolution college, of any notification received in accordance with the second subparagraph of paragraph 6 and with the first subparagraph of paragraph 7, and of any subsequent instruction by the competent authority in accordance with the second subparagraph of paragraph 7.
Where the competent authority is informed in accordance with the first subparagraph of paragraph 7 of this Article, it shall restrict or prohibit any remuneration of equity and instruments treated as equity, including dividend payments and buybacks by the CCP, to the fullest extent possible without triggering an event of default, and it may restrict or prohibit any payments of variable remuneration as defined by the CCP’s remuneration policy pursuant to Article 26(5) of OTC, discretionary pension benefits or severance packages to senior management as defined in point 29 of Article 2 of OTC.

CCPs shall, at least annually and in any case after any change to their legal or organisational structure or business or financial situation which could have a material effect on those plans or otherwise necessitate a change to the plans, review, test and, where necessary, update their recovery plans. Competent authorities may require CCPs to update their recovery plans more frequently.

Recovery plans shall be drawn up in accordance with Section A of the Annex and take into account all relevant interdependencies within the group to which the CCP belongs. Competent authorities may require CCPs to include additional information in their recovery plans. Where relevant, the competent authority of the CCP shall consult the competent authority of the CCP’s parent undertaking.

Recovery plans shall:

not assume any access to or receipt of extraordinary public financial support, central bank emergency liquidity assistance or central bank liquidity assistance provided under non-standard collateralisation, tenor and interest rate terms;

consider the interests of all stakeholders that are likely to be affected by the plan, including clearing members and, to the extent that the information is available, their direct and indirect clients; and

ensure that clearing members do not have unlimited exposures toward the CCP and stakeholders’ potential losses and liquidity shortfalls are transparent, measurable, manageable and controllable.

ESMA shall, in cooperation with the ESRB, by 12 February 2022 issue guidelines in accordance with Article 16 of ESAESMAR further specifying the range of scenarios to be considered for the purposes of paragraph 1 of this Article. In issuing such guidelines, ESMA shall take into account, where appropriate, supervisory stress testing exercises.

Where the CCP is part of a group and contractual parental or group support agreements form part of the recovery plan, the recovery plan shall contemplate scenarios in which those agreements cannot be honoured.

Following a default or a non-default event, a CCP shall use an additional amount of its pre-funded dedicated own resources, prior to the use of the arrangements and measures referred to in point 15 of Section A of the Annex to this Regulation. That amount shall not be lower than 10 % nor higher than 25 % of the risk-based capital requirements calculated in accordance with Article 16(2) of OTC.
To comply with that requirement, the CCP may use the amount of capital it holds, in addition to its minimum capital requirements, to comply with the notification threshold referred to in the delegated act adopted on the basis of Article 16(3) of OTC.

ESMA shall, in close cooperation with EBA and after consulting the ESCB, develop draft regulatory technical standards specifying the methodology for calculation and maintenance of the additional amount of pre-funded dedicated own resources to be used in accordance with paragraph 14. When developing those technical standards, ESMA shall take into account all of the following:
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

the structure and the internal organisation of CCPs and the nature, scope and complexity of their activities;

the structure of incentives of the shareholders, management and clearing members of CCPs and of the clients of clearing members;

the appropriateness for CCPs, depending on the currencies in which the financial instruments they clear are denominated, the currencies accepted as collateral and the risk stemming from their activities, in particular where they do not clear OTC derivatives as defined in point (7) of Article 2 of OTC, to invest that additional amount of dedicated own resources in assets other than those referred to in Article 47(1) of that Regulation; and

the rules applying to and the practices of third-country CCPs, as well as the international developments concerning the recovery and resolution of CCPs, in order to preserve the competitiveness of internationally active Union CCPs, and the competitiveness of Union CCPs compared to third-country CCPs providing clearing services in the Union.

Where ESMA concludes, on the basis of the criteria referred to in point (c) of the first subparagraph, that it is appropriate for certain CCPs to invest that additional amount of pre-funded dedicated own resources in assets other than those referred to in Article 47(1) of OTC, it shall also specify:

the procedure through which, in the event that those resources are not immediately available, CCPs may resort to recovery measures that require the financial contribution of non-defaulting clearing members;

the procedure that CCPs shall follow to subsequently reimburse the non-defaulting clearing members referred to in point (a) up to the amount to be used in accordance with paragraph 14 of this Article.

ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by 12 February 2022.

The CCP shall develop adequate mechanisms to involve linked FMIs and stakeholders which would bear losses, incur costs or contribute to cover liquidity shortfalls in the event that the recovery plan was implemented in the process of drawing-up of that plan.

The board of the CCP shall assess, taking into account the advice of the risk committee in accordance with Article 28(3) of OTC, and approve the recovery plan before submitting it to the competent authority.

Where the board of the CCP has decided not to follow the advice of the risk committee, it shall promptly inform the competent authority in accordance with Article 28(5) of OTC and explain its decision in detail to the competent authority.

Recovery plans shall be integrated in the corporate governance and the overall risk management framework of the CCP.

The measures set out in the recovery plans that create financial or contractual obligations on clearing members and, where relevant, clients and indirect clients, linked FMIs or trading venues shall form part of the operating rules of CCPs.

CCPs shall ensure that the measures set out in the recovery plans are enforceable at all times in all jurisdictions where the clearing members, linked FMIs or trading venues are located.

The obligation of CCPs to include in their recovery plans the right to make a recovery cash call and, if applicable, to reduce the value of any gains payable by the CCPs to non-defaulting clearing members shall not be applicable to the entities referred to in Articles 1(4) and 1(5) of OTC.

Clearing members shall communicate to their clients in a clear and transparent manner if and in what way measures in the CCP’s recovery plan may affect them.

CCPs shall submit their recovery plans to the competent authority.

The competent authority shall transmit each plan to the supervisory college and to the resolution authority without undue delay. The competent authority shall review the recovery plan and assess the extent to which it satisfies the requirements set out in Article 9 within six months of the submission of the plan and in coordination with the supervisory college in accordance with the procedure in Article 11.

When assessing the recovery plan, the competent authority and the supervisory college shall take into consideration the following factors:

the CCP’s capital structure, its default waterfall, the level of complexity of the organisational structure, the substitutability of its activities and the risk profile of the CCP, including in terms of financial, operational and cyber risks;

the overall impact that the implementation of the recovery plan would have on:

clearing members, and to the extent the information is available, their clients and indirect clients, including where they have been designated as O-SIIs;

any linked FMIs;

financial markets, including trading venues, served by the CCP; and

the financial system of any Member State and the Union as a whole;

whether the recovery tools and their sequence specified by the recovery plan create appropriate incentives for the CCP’s owners, clearing members, and where possible their clients, as relevant, to control the amount of risk that they bring to or incur in the system, monitor the CCP’s risk-taking and risk management activities and contribute to the CCP’s default management process.

When assessing the recovery plan, the competent authority shall take parental support agreements into consideration as valid parts of the recovery plan only where those agreements are contractually binding.

The resolution authority shall examine the recovery plan in order to identify any measures which may adversely impact the resolvability of the CCP. Where any such measures are identified, the resolution authority shall bring them to the attention of the competent authority and make recommendations to the competent authority on ways to address the adverse impact of those measures on the resolvability of the CCP, within two months of the transmission of each recovery plan by the competent authority.

Where the competent authority decides not to act on the recommendations of the resolution authority pursuant to paragraph 5, it shall fully justify that decision to the resolution authority.

Where the competent authority agrees with the recommendations of the resolution authority, or considers in coordination with the supervisory college in accordance with Article 11 that there are material deficiencies in the recovery plan or material impediments to its implementation, it shall notify the CCP and shall give it the opportunity to submit its views.

The competent authority, taking into account the CCP’s views, may require the CCP to submit, within two months, extendable by one month with the competent authority’s approval, a revised plan demonstrating how those deficiencies or impediments are addressed. The revised plan shall be assessed in accordance with paragraphs 2 to 7.

Where the competent authority, after consulting the resolution authority and in coordination with the supervisory college in accordance with the procedure set out in Article 11, considers that the deficiencies and impediments have not been adequately addressed by the revised plan, or where the CCP has not submitted a revised plan, it shall require the CCP to make specific changes to the plan within a reasonable period, as defined by the competent authority.

Where it is not possible to adequately remedy the deficiencies or impediments through specific changes to the plan, the competent authority, after consulting the resolution authority and in coordination with the supervisory college in accordance with the procedure set out in Article 11, shall require the CCP to identify within a reasonable timeframe any changes to be made to its business in order to address the deficiencies in or impediments to the implementation of the recovery plan.
Where the CCP fails to identify such changes within the timeframe set by the competent authority, or where the competent authority, after consulting the resolution authority and in coordination with the supervisory college in accordance with the procedures set out in Article 11, considers that the actions proposed would not adequately address the deficiencies or impediments to the implementation of the recovery plan, the competent authority shall require the CCP to take within a reasonable period, as defined by the competent authority, specified actions with regard to one or more of the following objectives, taking into account the seriousness of the deficiencies and impediments and the effect of the measures on the CCP’s business and ability to remain in compliance with OTC:

to reduce the risk profile of the CCP;

to enhance the CCP’s ability to be recapitalised in a timely manner to meet its capital and prudential requirements;

to review the CCP’s strategy and structure;

to make changes to the default waterfall, recovery measures and other loss allocation arrangements so as to improve resolvability and the resilience of critical functions;

to make changes to the governance structure of the CCP.

The request referred to in the second subparagraph of paragraph 10 shall be reasoned and notified in writing to the CCP.

ESMA, in cooperation with the ESCB and the ESRB, shall develop draft regulatory technical standards further specifying the factors referred to in points (a), (b) and (c) of paragraph 3.
ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

The supervisory college shall examine the recovery plan and, where any member of the college considers that there are material deficiencies in the recovery plan or any material impediment to its implementation, that member shall make recommendations to the competent authority of the CCP with regard to those matters within two months of the transmission of the recovery plan by the competent authority.

The supervisory college shall reach a joint decision on all of the following issues:

the review and assessment of the recovery plan;

the application of the measures referred to in Article 10(7), (8), (9) and (10).

The supervisory college shall reach a joint decision on the issues referred to in paragraph 2 within four months of the date of the transmission of the recovery plan by the competent authority.
ESMA may, at the request of a competent authority within the supervisory college, assist the supervisory college in reaching a joint decision in accordance with point (c) of Article 31(2) of ESAESMAR.

Where, after four months from the date of transmission of the recovery plan, the college has failed to reach a joint decision on the issues referred to in paragraph 2, the competent authority of the CCP shall make its own decision.
The competent authority of the CCP shall make the decision referred to in the first subparagraph taking into account the views of the other college members expressed during the four-month period. The competent authority of the CCP shall notify in writing that decision to the CCP and to the other members of the college.

Where, by the end of that four-month period, a joint decision has not been reached and a simple majority of the voting members disagree with the competent authority’s proposal for a joint decision on a matter in relation to the assessment of recovery plans or implementation of the measures pursuant to points (a), (b) and (d) of Article 10(10) of this Regulation, any of the voting members concerned, based on that majority, may refer that matter to ESMA in accordance with Article 19 of ESAESMAR. The competent authority of the CCP shall await the decision taken by ESMA in accordance with Article 19(3) of ESAESMAR and decide in accordance with the decision of ESMA.

The four-month period shall be deemed to be the conciliation phase within the meaning of ESAESMAR. ESMA shall take its decision within one month of the referral of the matter to it. The matter shall not be referred to ESMA after the end of the four-month period or after a joint decision has been reached. In the absence of an ESMA decision within one month, the decision of the competent authority of the CCP shall apply.

The resolution authority of the CCP shall, after consultation with the competent authority and in coordination with the resolution college, in accordance with the procedure set out in Article 14, draw up a resolution plan for the CCP.

The resolution plan shall provide for the resolution actions that the resolution authority may take where the CCP meets the conditions for resolution referred to in Article 22.

The resolution plan shall take into consideration at least the following:

the CCP’s failure, including in situations of broader financial instability or system wide events, due to one of the following or their combination:

default events, and

non-default events;

the impact that the implementation of the resolution plan would have on:

the clearing members, and to the extent the information is available, their clients and indirect clients, including where they have been designated as O-SIIs and those likely to be subject to recovery measures or resolution actions in accordance with Directive 2014/59;

any linked FMIs;

financial markets, including trading venues, served by the CCP; and

the financial system in any Member State or the Union as a whole, and, to the extent possible, in third countries where it provides services;

the manner and the circumstances under which a CCP may apply for the use of central bank facilities provided under standard collateralisation, tenor and interest rate terms and the identification of the assets that would be expected to qualify as collateral.

The resolution plan shall not assume any of the following:

extraordinary public financial support;

central bank emergency liquidity assistance;

central bank liquidity assistance provided under non-standard collateralisation, tenor and interest rate terms.

The resolution plan shall make prudent assumptions regarding the financial resources available as resolution tools that may be required to achieve the resolution objectives and the resources that are expected to be available in accordance with the CCP’s rules and arrangements at the time of entering into resolution. Those prudent assumptions shall take into account the relevant findings of latest stress tests carried out in accordance with Article 32(2) of ESAESMAR, specified in point (b) of Article 24 a(7) of OTC, as well as scenarios of extreme market conditions beyond those in the CCP’s recovery plan.

The resolution authority of a CCP shall, after consultation with the competent authority and in coordination with the resolution college in accordance with the procedure in Article 14, review resolution plans and where appropriate update them, at least annually and in any case after changes to the legal or organisational structure of the CCP, its business or financial situation or any other change that materially affects the effectiveness of the plan.
The CCP and the competent authority shall promptly inform the resolution authority of any such change.

The resolution plan shall specify the circumstances and different scenarios for applying the resolution tools and exercising the resolution powers. It shall clearly distinguish, in particular through different scenarios, between failure caused by default events, non-default events, and a combination of both, as well as between different types of non-default events. The resolution plan shall include the following, quantified whenever appropriate and possible:

a summary of the key elements of the plan, distinguishing between default events, non-default events and a combination of the two;

a summary of the material changes to the CCP that have occurred since the resolution plan was last updated;

a description of how the CCP’s critical functions could be legally and economically separated, to the extent necessary, from its other functions so as to ensure the continuity of its critical functions in the resolution of the CCP;

an estimation of the timeframe for implementing each material aspect of the plan, including for replenishing the CCP’s financial resources;

a detailed description of the assessment of resolvability carried out in accordance with Article 15;

a description of any measures required pursuant to Article 16 to address or remove impediments to resolvability identified as a result of the assessment carried out in accordance with Article 15;

a description of the processes for determining the value and marketability of the critical functions and assets of the CCP;

a detailed description of the arrangements for ensuring that the information required pursuant to Article 13 is up to date and available to the resolution authorities at all times;

an explanation as to how resolution actions could be financed without the assumption of the elements referred to in paragraph 4;

a detailed description of the different resolution strategies that could be applied according to the different possible scenarios and their related timeframes;

a description of critical interdependencies between the CCP and other market participants and between the CCP and critical service providers, interoperability arrangements and links with other FMIs, as well as ways to address all of those interdependencies;

a description of critical intra-group interdependencies as well as ways to address them;

a description of the different options to ensure:

access to payments and clearing services and other infrastructures;

timely settlement of obligations due to clearing members and, where applicable, their clients and any linked FMIs;

access of clearing members, and, where applicable, their clients on a transparent and non-discriminatory basis to securities or cash accounts provided by the CCP and securities or cash collateral posted to and held by the CCP that is owed to such participants;

continuity in the operations of links between the CCP and other FMIs and between the CCP and trading venues;

preservation of the portability of the positions and related assets of direct and indirect clients; and

preservation of the licenses, authorisations, recognitions and legal designations of a CCP where necessary for the continued performance of the CCP’s critical functions including its recognition for the purposes of the application of the relevant settlement finality rules and the participation in or links with other FMIs or with trading venues;

a description of how the resolution authority will obtain the necessary information to perform the valuation referred to in Article 24;

an analysis of the impact of the plan on the employees of the CCP, including an assessment of any associated costs, and a description of envisaged procedures to consult with staff during the resolution process, taking into account any national rules and systems for dialogue with social partners;

a plan for communicating with the media and the public so as to be as transparent as possible;

a description of essential operations and systems for maintaining the continuous functioning of the CCP’s operational processes;

a description of the arrangements for notifying the resolution college in accordance with Article 72(1);

a description of the measures to facilitate the portability of positions and related assets of the clearing members and clients of the defaulting CCP from the defaulting CCP to another CCP or a bridge CCP while not affecting the contractual relationships between the clearing members and their clients.

The information referred to in point (a) of paragraph 7 shall be disclosed to the CCP concerned. The CCP may express its opinion in writing on the resolution plan to the resolution authority. That opinion shall be included in the plan.

ESMA, after consulting the ESRB and taking into account the relevant provisions of the delegated acts adopted on the basis of Article 10(9) of Directive 2014/59 and respecting the principle of proportionality shall develop draft regulatory technical standards further specifying the contents of the resolution plan in accordance with paragraph 7 of this Article.
When developing the draft regulatory technical standards, ESMA shall enable sufficient flexibility for resolution authorities to take into consideration the specificities of their national legal framework in the area of insolvency law, as well as the nature and complexity of the clearing business performed by the CCPs.
ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

CCPs shall cooperate as necessary in the drawing up of resolution plans and provide their resolution authority, either directly or through their competent authority, with all the information necessary to draw up and implement those plans, including the information and analysis specified in Section B of the Annex.
Competent authorities shall provide resolution authorities with any information referred to in the first subparagraph which is already available to them.

Resolution authorities may require CCPs to provide them with detailed records of the contracts referred to in Article 29 of OTC to which they are a party. Resolution authorities may specify a time limit to provide those records and may specify different time limits for different types of contracts.

A CCP shall exchange information in a timely manner with its competent authorities in order to facilitate the assessment of the risk profiles of the CCP and the interconnectedness with other FMIs, other financial institutions and with the financial system in general as referred to in Articles 9 and 10. Competent authorities shall transmit information to the supervisory college, where they deem such information significant.

The resolution authority shall transmit to the resolution college a draft resolution plan, the information provided in accordance with Article 13 and any additional information relevant to the resolution college.

The resolution college shall reach a joint decision regarding the resolution plan and any changes thereto within a four-month period from the date of the transmission of that plan by the resolution authority referred to in paragraph 1.
The resolution authority shall ensure that ESMA is provided with all the information that is relevant to its role in accordance with this Article.

The resolution authority may, in accordance with Article 4(4), decide to involve third-country authorities when drawing up and reviewing the resolution plan, provided that they meet the confidentiality requirements laid down in Article 73 and are from jurisdictions in which any of the following entities are established:

the CCP’s parent undertaking, where applicable;

the clearing members of the CCP where their contribution to the default fund of the CCP is, on an aggregate basis over a one-year period, higher than those of the third Member State with the largest contributions as referred to in point (c) of Article 18(2) of OTC;

the CCP’s subsidiaries, where applicable;

other providers of critical services to the CCP;

interoperable CCPs.

ESMA may, at the request of a resolution authority, assist the resolution college in reaching a joint decision in accordance with point (c) of Article 31(2) of ESAESMAR.

Where, after four months from the date of transmission of the resolution plan, the resolution college has failed to reach a joint decision, the resolution authority shall make its own decision on the resolution plan. The resolution authority shall make its decision taking into account the views of the other resolution college members expressed during the four-month period. The resolution authority shall notify in writing the decision to the CCP and to the other members of the resolution college.

Where, by the end of the four-month period referred to in paragraph 5 of this Article, a joint decision has not been reached and a simple majority of the voting members disagree with the resolution authority’s proposal for a joint decision on a matter in relation to the resolution plan, any of the voting members concerned, based on that majority, may refer that matter to ESMA in accordance with Article 19 of ESAESMAR. The resolution authority of the CCP shall await the decision taken by ESMA in accordance with Article 19(3) of ESAESMAR and decide in accordance with the decision of ESMA.
The four-month period shall be deemed to be the conciliation phase within the meaning of ESAESMAR. ESMA shall take its decision within one month of the referral of the matter to it. The matter shall not be referred to ESMA after the end of the four-month period or after a joint decision has been reached. In the absence of an ESMA decision within one month, the decision of the resolution authority shall apply.

Where a joint decision is taken pursuant to paragraph 1 and any resolution authority or competent ministry considers under paragraph 6 that the subject matter of the disagreement impinges on the fiscal responsibilities of its Member State, the resolution authority of the CCP shall initiate a reassessment of the resolution plan.

The resolution authority, in coordination with the resolution college in accordance with the procedure set out in Article 17, and after consultation with the competent authority, shall assess the extent to which a CCP is resolvable without assuming any of the following:

extraordinary public financial support;

central bank emergency liquidity assistance;

central bank liquidity assistance provided under non-standard collateralisation, tenor and interest rate terms.

A CCP shall be deemed resolvable where the resolution authority considers it feasible and credible to either liquidate it under normal insolvency proceedings or to resolve it applying the resolution tools and exercising the resolution powers while ensuring the continuity of the CCP’s critical functions and avoiding any use of extraordinary public financial support and, to the maximum extent possible, any significant adverse effect on the financial system and the potential for undue disadvantage to affected stakeholders.
The adverse effects referred to in the first subparagraph shall include broader financial instability or system wide events in any Member State.
The resolution authority shall notify ESMA in a timely manner where it considers that a CCP is not resolvable.

Upon request by the resolution authority, a CCP shall demonstrate that:

there are no impediments to the reduction of the value of instruments of ownership following the exercise of resolution powers, regardless of whether outstanding contractual arrangements or other measures in the CCP’s recovery plan have been fully exhausted; and

the contracts of the CCP with clearing members or third parties do not enable those clearing members or third parties to successfully challenge the exercise of resolution powers by a resolution authority or otherwise avoid being subject to those powers.

For the purposes of the assessment of resolvability referred to in paragraph 1, the resolution authority shall, as relevant, examine the matters specified in Section C of the Annex.

By 12 August 2022, ESMA, in close cooperation with the ESRB, shall issue guidelines to promote the convergence of resolution practices regarding the application of Section C of the Annex to this Regulation in accordance with Article 16 of ESAESMAR.

The resolution authority in coordination with the resolution college shall make the resolvability assessment at the same time as drawing up and updating the resolution plan in accordance with Article 12.

Where, following the assessment in Article 15, the resolution authority, in coordination with the resolution college in accordance with the procedure set out in Article 17, concludes that there are material impediments to the resolvability of a CCP, the resolution authority, in cooperation with the competent authority, shall prepare and submit a report to the CCP and to the resolution college.
The report referred to in the first subparagraph shall analyse the material impediments to the effective application of the resolution tools and the exercise of the resolution powers in relation to the CCP, consider their impact on the business model of the CCP and recommend targeted measures to remove those impediments.

The requirement laid down in Article 14 for resolution colleges to reach a joint decision on resolution plans shall be suspended following the submission of the report referred to in paragraph 1 of this Article until the measures to remove the material impediments to resolvability have been accepted by the resolution authority pursuant to paragraph 3 of this Article or alternative measures have been decided pursuant to paragraph 4 of this Article.

Within four months of the date of receipt of the report submitted in accordance with paragraph 1 of this Article, the CCP shall propose to the resolution authority possible measures to address or remove the material impediments identified in the report. The resolution authority shall communicate to the resolution college any measure proposed by the CCP. The resolution authority and resolution college shall assess, in accordance with point (b) of Article 17(1), whether those measures effectively address or remove those impediments.

Where the resolution authority in coordination with the resolution college in accordance with the procedure set out in Article 17 concludes that the measures proposed by a CCP in accordance with paragraph 3 of this Article would not effectively reduce or remove the impediments identified in the report, the resolution authority shall identify alternative measures which it shall communicate to the resolution college for joint decision in accordance with point (c) of Article 17(1).
The alternative measures referred to in the first subparagraph shall take into account the following:

the threat to financial stability of those material impediments to the resolvability of a CCP;

the likely effect of the alternative measures on:

the CCP, including its business model and operational efficiency;

its clearing members, and to the extent the information is available, their clients and indirect clients, including where they have been designated as O-SIIs;

any linked FMIs;

financial markets, including trading venues, served by the CCP;

the financial system in any Member State or the Union as a whole; and

the internal market; and

the effects on the provision of integrated clearing services for different products and portfolio margining across asset classes.

For the purposes of points (a) and (b) of the second subparagraph, the resolution authority shall consult the competent authority and the resolution college and, where appropriate, relevant designated national macroprudential authorities.

The resolution authority shall notify the CCP in writing, either directly or indirectly through the competent authority, of the alternative measures to take in order to achieve the objective of removing impediments to resolvability. The resolution authority shall justify why the measures proposed by the CCP would not be able to remove the material impediments to resolvability and how the alternative measures would be effective in doing so.

The CCP shall propose within one month a plan to comply with the alternative measures, with a reasonable timeframe for the implementation of the plan. If deemed necessary by the resolution authority, the resolution authority may shorten or extend the proposed timeframe.

For the purposes of paragraph 4, the resolution authority may, after consulting the competent authority and while allowing for a reasonable timeframe for implementation:

require the CCP to revise or draw up service agreements, whether intra-group or with third parties, to cover the provision of critical functions;

require the CCP to limit its maximum individual and aggregate uncovered exposures;

require the CCP to make changes to how it collects and holds margins pursuant to Article 41 of OTC;

require the CCP to make changes to the composition and number of its default funds referred to in Article 42 of OTC;

impose on the CCP specific or regular additional information requirements;

require the CCP to divest specific assets;

require the CCP to limit or cease specific existing or proposed activities;

require the CCP to make changes to its recovery plan, operating rules and other contractual arrangements;

restrict or prevent the development of new or existing business lines or provision of new or existing services;

require changes to legal or operational structures of the CCP or any group entity directly or indirectly under its control to ensure that critical functions may be legally and operationally separated from other functions through the application of resolutions tools;

require the CCP to operationally and financially segregate its different clearing services so as to isolate some specific asset classes from other asset classes and where deemed appropriate, to restrict netting sets covering different asset classes;

require the CCP to set up a parent undertaking in the Union;

require the CCP to issue liabilities that can be written down and converted or to set aside other financial resources to increase the capacity for loss absorption, recapitalisation and the replenishment of pre-funded resources;

require the CCP to take other steps to enable capital, other liabilities and contracts to be able to absorb losses, to recapitalise the CCP or to replenish pre-funded resources. Actions considered may include in particular attempting to renegotiate any liability the CCP has issued or to revise contractual terms, with a view to ensuring that any decision of the resolution authority to write down, convert or restructure that liability, instrument or contract would be effected under the law of the jurisdiction governing that liability or instrument;

where the CCP is a subsidiary, coordinate with relevant authorities with a view to requiring the parent undertaking to set up a separate holding company to control the CCP, where that measure is necessary in order to facilitate the resolution of the CCP and to avoid the adverse effects that the application of the resolution tools and the exercise of the resolution powers could have on other entities of the group;

restrict or prohibit interoperability links of the CCP where such a restriction or prohibition is necessary in order to avoid adverse effects on the achievement of resolution objectives.

The resolution college shall reach a joint decision regarding:

the identification of the material impediments to resolvability pursuant to Article 15(1);

the assessment of the measures proposed by the CCP pursuant to Article 16(3), as necessary;

the alternative measures required pursuant to Article 16(4).

The joint decision on the identification of material impediments to resolvability referred to in point (a) of paragraph 1 of this Article shall be adopted within four months of the submission of the report referred to in Article 16(1) to the resolution college.

The joint decision referred to in point (b) of paragraph 1 of this Article shall be adopted within four months of submission of the CCP’s proposed measures to remove impediments to resolvability as referred to in Article 16(3).

The joint decision referred to in point (c) of paragraph 1 of this Article shall be adopted within four months of the communication of the alternative measures to the resolution college as referred to in Article 16(4).

The joint decisions referred to in paragraph 1 shall be reasoned and notified in writing by the resolution authority to the CCP and, where the resolution authority deems it relevant, its parent undertaking.

ESMA may, at the request of the resolution authority of the CCP, assist the resolution college in reaching a joint decision in accordance with point (c) of Article 31(2) of ESAESMAR.

Where, after four months from the date of transmission of the report provided for in Article 16(1), the resolution college has failed to adopt a joint decision, the resolution authority shall take its own decision on the appropriate measures to be taken in accordance with Article 16(5). The resolution authority shall take its decision having taken into account the views of the other resolution college members expressed during the four-month period.
The resolution authority shall notify the decision to the CCP, to its parent undertaking where relevant, and to the other members of the resolution college in writing.

Where, by the end of the four-month period referred to in paragraph 7 of this Article, a joint decision has not been reached and a simple majority of the voting members disagree with the resolution authority’s proposal for a joint decision on a matter referred to in point (j), (l) or (o) of Article 16(7) of this Regulation, any of the voting members concerned, based on that majority, may refer that matter to ESMA in accordance with Article 19 of ESAESMAR. The resolution authority of the CCP shall await the decision taken by ESMA in accordance with Article 19(3) of ESAESMAR and decide in accordance with the decision of ESMA.
The four-month period shall be deemed to be the conciliation phase within the meaning of ESAESMAR. ESMA shall take its decision within one month of the referral of the matter to it. The matter shall not be referred to ESMA after the end of the four-month period or after a joint decision has been reached. In the absence of an ESMA decision within one month, the decision of the resolution authority shall apply.

Where a CCP infringes, or is likely to infringe in the near future, the capital and prudential requirements of OTC, or poses a risk to financial stability in the Union or in one or more of its Member States, or where the competent authority has determined that there are other indications of an emerging crisis situation that could affect the operations of the CCP, in particular, its ability to provide clearing services, the competent authority may:

require the CCP to update the recovery plan in accordance with Article 9(6) of this Regulation, where the circumstances that required early intervention are different from the assumptions set out in the initial recovery plan;

require the CCP to implement one or more of the arrangements or measures set out in the recovery plan within a specific timeframe. Where the plan is updated pursuant to point (a), those arrangements or measures shall include any updated arrangements or measures;

require the CCP to identify the causes of the infringement or likely infringement as mentioned in paragraph 1 and draw up an action programme, including suitable measures and timeframes;

require the CCP to convene a meeting of its shareholders or, if the CCP fails to comply with that requirement, convene the meeting itself. In both cases the competent authority shall set the agenda, including the decisions to be considered for adoption by the shareholders;

require one or more members of the board or senior management to be removed or replaced where any of those persons is found unfit to perform their duties pursuant to Article 27 of OTC;

require changes to the business strategy of the CCP;

require changes to the legal or operational structures of the CCP;

provide the resolution authority with all the information necessary to update the CCP’s resolution plan in order to prepare for the possible resolution of the CCP and the valuation of its assets and liabilities in accordance with Article 24 of this Regulation, including any information acquired through on-site inspections;

require, where necessary and in accordance with paragraph 4, the implementation of the CCP’s recovery measures;

require the CCP to abstain from the implementation of certain recovery measures where the competent authority has determined that the implementation of those measures may have an adverse effect on financial stability in the Union or in one or more of its Member States;

require the CCP to replenish its financial resources in a timely manner in order to comply or maintain compliance with its capital and prudential requirements;

require the CCP to instruct clearing members to invite their clients to participate directly in auctions organised by the CCP when the nature of the auction justifies this exceptional participation. Clearing members shall inform their clients comprehensively about the auction following the instructions received from the CCP. In particular, the CCP shall specify the deadline after which it will not be possible to participate in the auction. Clients shall directly inform the CCP before this deadline of their willingness to participate in the auction. The CCP shall then facilitate the bidding process for those clients. A client shall only be authorised to participate in the auction if it is able to demonstrate to the CCP that it has set up the appropriate contractual relationship with a clearing member to execute and clear the transactions that may result from the auction;

restrict or prohibit any remuneration of equity and instruments treated as equity to the fullest extent possible without triggering an event of default, including dividend payments and buybacks by the CCP, and it may restrict, prohibit or freeze any payments of variable remuneration as defined by the CCP’s remuneration policy pursuant to Article 26(5) of OTC, discretionary pension benefits or severance packages to senior management as defined in point 29 of Article 2 of OTC.

For each of the measures referred to in paragraph 1, the competent authority shall set an appropriate deadline and evaluate the effectiveness of those measures once they have been taken.

The competent authority shall only apply the measures in points (a) to (m) of paragraph 1 after taking account of the impact of those measures in other Member States where the CCP operates or provides services and after informing the relevant competent authorities, in particular where the CCP’s operations are critical or important for local financial markets, including the places in which clearing members, linked trading venues and FMIs are established.

The competent authority shall apply the measure in point (i) of paragraph 1 only where that measure is in the public interest and is necessary to achieve any of the following objectives:

to maintain the financial stability in the Union or in one or more of its Member States;

to maintain the continuity of the critical functions of the CCP and access to critical functions on a transparent and non-discriminatory basis;

to maintain or restore the financial resilience of the CCP.

The competent authority shall not apply the measure in point (i) of paragraph 1 in relation to measures involving the transfer of property, rights or liabilities of another CCP.

Where a CCP uses contributions to the default fund of the non-defaulting clearing members in accordance with Article 45(3) of OTC, it shall inform the competent authority and the resolution authority without undue delay and explain whether that event reflects weaknesses or problems of that CCP.

Where the conditions referred to in paragraph 1 are met, the competent authority shall notify ESMA and the resolution authority and consult the supervisory college on the envisaged measures provided for in paragraph 1.
Following those notifications and the consultation of the supervisory college, the competent authority shall decide whether to apply any of the measures provided for in paragraph 1. The competent authority shall notify the decision on the measures to be taken to the supervisory college, the resolution authority and ESMA.

The resolution authority, following the notification of the first subparagraph of paragraph 6 of this Article, may require the CCP to contact potential purchasers in order to prepare for its resolution, subject to the conditions laid down in Article 41 and the confidentiality provisions laid down in Article 73.

ESMA shall, by 12 February 2022, issue guidelines in accordance with Article 16 of ESAESMAR to promote the consistent application of the triggers for the use of the measures referred to in paragraph 1 of this Article.

Where there is a significant deterioration in the financial situation of a CCP, or the CCP infringes its legal requirements, including its operating rules, and other measures taken in accordance with Article 18 are not sufficient to reverse that situation, competent authorities may require total or partial removal of the senior management or board of the CCP.
Where the competent authority requires complete or partial removal of the senior management or board of the CCP, it shall notify ESMA, the resolution authority and the supervisory college.

The appointment of the new senior management or board shall be done in accordance with Article 27 of OTC and be subject to the approval or consent of the competent authority. Where the competent authority considers that replacement of the senior management or board as referred to in this Article is insufficient, it may appoint one or more temporary administrators to the CCP to replace or to temporarily work with the board and senior management of the CCP. Any temporary administrator shall have the qualifications, ability and knowledge required to carry out his or her functions and be free of any conflict of interests.

Without prejudice to the responsibility of clearing members to take losses which go beyond the default waterfall, where a CCP in recovery caused by a non-default event has applied the arrangements and measures to reduce the value of any gains payable by the CCP to non-defaulting clearing members set out in its recovery plan, and as a result has not entered into resolution, the competent authority of the CCP may require the CCP to recompense the clearing members for their loss through cash payments or, where appropriate, may require the CCP to issue instruments recognising a claim on the future profits of the CCP. The possibility to provide recompense to non-defaulting clearing members shall not apply to their contractually committed losses in the default management or recovery phases.
The cash payments or the value of instruments recognising a claim on future profits of the CCP issued to each affected non-defaulting clearing member shall be proportionate to its loss in excess of its contractual commitments. The instruments recognising a claim on future profits of the CCP shall entitle the possessor to receive payments from the CCP on an annual basis until the loss has been recouped, if possible in full, subject to an appropriate maximum number of years from the date of issuance. If the non-defaulting clearing members have passed on the excess losses to their clients, the non-defaulting clearing members shall be obliged to pass the payments received by the CCP on to their clients, to the extent that the losses being recompensed are related to client positions. An appropriate maximum share of the CCP’s annual profits shall be used towards payments relating to those instruments.

ESMA shall develop draft regulatory technical standards to specify the order in which recompense must be paid, the appropriate maximum number of years and the appropriate maximum share of the CCP’s annual profits referred to in the second subparagraph of paragraph 1.
ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

When applying the resolution tools and exercising the resolution powers, the resolution authority shall have regard to all the following resolution objectives, which are of equal significance and shall balance them as appropriate to the nature and circumstances of each case:

to ensure the continuity of the CCP’s critical functions, in particular:

the timely settlement of the CCP’s obligations to its clearing members and, where applicable, their clients;

continuous access of clearing members and, where applicable, their clients to securities or cash accounts provided by the CCP and collateral in the form of financial assets held by the CCP;

to ensure the continuity of the links with other FMIs which, if disrupted, would have a material negative impact on financial stability in the Union or in one or more of its Member States as well as the timely completion of payment, clearing, settlement and record-keeping functions;

to avoid a significant adverse effect on the financial system in the Union or in one or more of its Member States, in particular by preventing or mitigating contagion of financial distress to the CCP’s clearing members, their clients or to the wider financial system, including other FMIs, and by maintaining market discipline and public confidence; and

to protect public funds by minimising reliance on extraordinary public financial support and the potential risk of losses for taxpayers.

When pursuing the objectives set out in paragraph 1, the resolution authority shall seek to minimise the cost of resolution on all affected stakeholders and avoid destruction of the CCP’s value, unless such destruction is necessary to achieve the resolution objectives.

The resolution authority shall take a resolution action in relation to a CCP provided that all of the following conditions are met:

the CCP is failing or is likely to fail as determined by any of the following:

the competent authority, after consulting the resolution authority;

the resolution authority after consulting the competent authority, where the resolution authority has the necessary tools for reaching that conclusion;

there is no reasonable prospect that any alternative private sector measures, including the CCP’s recovery plan or other contractual arrangements, or supervisory action, including early intervention measures taken, would prevent the failure of the CCP within a reasonable timeframe, having regard to all relevant circumstances;

a resolution action is necessary in the public interest to achieve, while being proportionate to, one or more of the resolution objectives, and winding up the CCP under normal insolvency procedures would not meet those resolution objectives to the same extent.

For the purposes of point (a)(ii) of paragraph 1, the competent authority shall provide the resolution authority on its own initiative and without delay with any information that may give an indication that the CCP is failing or likely to fail. The competent authority shall also provide the resolution authority upon request with any other information needed in order to perform its assessment.

For the purposes of point (a) of paragraph 1, a CCP shall be deemed to be failing or likely to fail where one or more of the following circumstances apply:

the CCP infringes, or is likely to infringe, its authorisation requirements in a way that would justify the withdrawal of its authorisation pursuant to Article 20 of OTC;

the CCP is unable, or is likely to be unable, to provide a critical function;

the CCP is unable, or is likely to be unable, to restore its viability through the implementation of its recovery measures;

the CCP is unable, or is likely to be unable, to pay its debts or other liabilities as they fall due;

the CCP requires extraordinary public financial support.

For the purposes of point (e) of paragraph 3, public financial support shall not be considered extraordinary public financial support where it meets all of the following conditions:

it takes the form of a State guarantee to back liquidity facilities provided by a central bank according to the central bank’s conditions, or the form of a State guarantee of newly issued liabilities;

the State guarantees referred to in point (a) of this paragraph are required to remedy a serious disturbance in the economy of a Member State and preserve financial stability; and

the State guarantees referred to in point (a) of this paragraph are confined to solvent CCPs, conditional on final approval under the Union State aid framework, are of a precautionary and temporary nature, proportionate to remedy the consequences of the serious disturbance referred to in point (b) of this paragraph and are not used to offset losses that the CCP has incurred or is likely to incur in the future.

The resolution authority may also take a resolution action where it considers that the CCP has applied or intends to apply recovery measures which could prevent the CCP’s failure but cause significant adverse effects to the financial system of the Union or of one of more of its Member States.

ESMA shall issue guidelines to promote the convergence of supervisory and resolution practices regarding the application of the circumstances under which a CCP is deemed to be failing or likely to fail by 12 February 2022, taking into consideration, as appropriate, the nature, and complexity of the services provided by CCPs established in the Union.
When developing those guidelines, ESMA shall take into account the guidelines issued in accordance with Article 32(6) of Directive 2014/59.

The resolution authority shall take all appropriate measures to apply the resolution tools referred to in Article 27 and exercise the resolution powers referred to in Article 48 in accordance with the following principles:

all contractual obligations and other arrangements in the CCP’s recovery plan are enforced, to the extent that they have not been exhausted before entry into resolution, unless the resolution authority determines that in order to achieve the resolution objectives in a timely manner any of the following or both are more appropriate:

to refrain from enforcing certain contractual obligations under the CCP’s recovery plan or otherwise deviate from it;

to apply resolution tools or exercise the resolution powers;

the shareholders of the CCP under resolution bear first losses following the enforcement of all obligations and arrangements referred to in point (a) and in accordance with that point;

creditors of the CCP under resolution bear losses after the shareholders in accordance with the order of priority of their claims under normal insolvency proceedings, unless expressly provided otherwise in this Regulation;

the CCP’s creditors of the same class are treated in an equitable manner;

the CCP’s shareholders, clearing members and other creditors should not incur greater losses than they would have incurred in the circumstances referred to in Article 60;

the board and senior management of the CCP under resolution are replaced, except where the resolution authority considers that the retention of the board and senior management, in whole or in part, is necessary for the achievement of the resolution objectives;

resolution authorities inform and consult employee representatives in accordance with their national laws, collective agreements or practice;

resolution tools are applied and resolution powers are exercised without prejudice to provisions on the representation of employees in management bodies as provided for in national laws, collective agreements or practice; and

where a CCP is part of a group, resolution authorities take account of the impact on other group entities, in particular where such group comprises other FMIs, and on the group as a whole.

Resolution authorities may take a resolution action which deviates from the principles set out in points (d) or (e) of paragraph 1 of this Article where it is justified in the public interest to achieve the resolution objectives and is proportionate to the risk addressed. However, where that deviation results in a shareholder, a clearing member or any other creditor incurring greater losses than it would have incurred in the circumstances referred to in Article 60, the entitlement to payment of the difference under Article 62 shall apply.

The board and senior management of a CCP under resolution shall provide the resolution authority with all necessary assistance for the achievement of the resolution objectives.

Resolution authorities shall ensure that any resolution action is taken on the basis of a valuation ensuring a fair, prudent and realistic assessment of the assets, liabilities, rights and obligations of the CCP.

Before the resolution authority places a CCP under resolution, it shall ensure that a first valuation is carried out to determine whether the conditions for resolution under Article 22(1) are met.

After the resolution authority has decided to place a CCP under resolution, it shall ensure that a second valuation is carried out to:

inform the decision on the appropriate resolution action to be taken;

ensure that any losses on the assets and rights of the CCP are fully recognised at the moment the resolution tools are applied;

inform the decision on the extent of the cancellation or dilution of instruments of ownership and the decision on the value and number of instruments of ownership issued or transferred as a result of the exercise of resolution powers;

inform the decision on the extent of the write-down or conversion of any unsecured liabilities, including debt instruments;

where the loss and position allocation tools are applied, inform the decision on the extent of losses to be applied against affected creditors’ claims, outstanding obligations or positions in relation to the CCP and on the extent and necessity of a resolution cash call;

where the bridge CCP tool is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the bridge CCP and the decision on the value of any consideration that may be paid to the CCP under resolution or, where relevant, to the holders of the instruments of ownership;

where the sale of business tool is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the third party purchaser and to inform the resolution authority’s understanding of what constitutes commercial terms for the purposes of Article 40.

For the purposes of point (d), the valuation shall take into account any losses that would be absorbed by the enforcement of any outstanding obligations of the clearing members or other third parties owed to the CCP and the level of conversion to be applied to debt instruments.

The valuations referred to in paragraphs 2 and 3 of this Article may be subject to an appeal in accordance with Article 74 only together with the decision to apply a resolution tool or to exercise a resolution power.

The resolution authority shall ensure that the valuations referred to in Article 24 are carried out:

by a person independent from any public authority and from the CCP; or

by the resolution authority, where those valuations cannot be carried out by a person as referred to in point (a).

The valuations referred to in Article 24 shall be considered definitive where they are carried out by the person referred to in point (a) of paragraph 1 of this Article and all the requirements laid down in this Article are fulfilled.

Without prejudice to the Union State aid framework, where applicable, a definitive valuation shall be based on prudent assumptions and shall not assume any potential provision of extraordinary public financial support, any central bank emergency liquidity assistance or any central bank liquidity assistance provided under non-standard collateralisation, tenor and interest rate terms to the CCP from the point in time at which resolution action is taken. The valuation shall also take account of the potential recovery of any reasonable expenses incurred by the CCP under resolution in accordance with Article 27(10).

A definitive valuation shall be supplemented by the following information held by the CCP:

an updated balance sheet and a report on the financial position of the CCP, including the remaining available pre-funded resources and outstanding financial commitments;

the records of cleared contracts referred to in Article 29 of OTC; and

any information on the market and accounting values of its assets, liabilities and positions, including relevant claims and outstanding obligations owed or due to the CCP.

A definitive valuation shall indicate the subdivision of the creditors in classes in accordance with their priority levels under the applicable insolvency law. It shall also include an estimate of the treatment that each class of shareholders and creditors would have been expected to receive in application of the principle specified in point (e) of Article 23(1).
The estimate referred to in the first subparagraph shall not prejudice the valuation referred to in Article 61.

ESMA, taking into account the regulatory technical standards developed in accordance with Article 36(14) and (15) of Directive 2014/59 and adopted pursuant to Article 36(16) thereof, shall develop draft regulatory technical standards to specify:
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

the circumstances in which a person is deemed to be independent from both the resolution authority and from the CCP for the purposes of paragraph 1 of this Article;

the methodology for assessing the value of the assets and liabilities of the CCP; and

the separation of the valuations under Articles 24 and 61 of this Regulation.

ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.

The valuations referred to in Article 24 that do not meet the requirements laid down in Article 25(2) shall be considered to be provisional valuations.
Provisional valuations shall include a buffer for additional losses and an appropriate justification for that buffer.

Where resolution authorities take resolution action on the basis of a provisional valuation, they shall ensure that a definitive valuation is carried out as soon as practicable.
The resolution authority shall ensure that the definitive valuation referred to in the first subparagraph:

allows for full recognition of any losses of the CCP in its books;

informs a decision to write back creditors’ claims or to increase the value of the consideration paid, in accordance with paragraph 3.

Where the definitive valuation’s estimate of the net asset value of the CCP is higher than the provisional valuation’s estimate of the net asset value of the CCP, the resolution authority may:

increase the value of the claims of affected creditors which have been written down or restructured;

require a bridge CCP to make a further payment of consideration in respect of the assets, liabilities, rights and obligations to the CCP under resolution or, as the case may be, in respect of the instruments of ownership to the owners of those instruments.

ESMA, taking into account the regulatory technical standards developed in accordance with Article 36(15) of Directive 2014/59 and adopted pursuant to Article 36(16) thereof, shall develop draft regulatory technical standards to specify, for the purposes of paragraph 1 of this Article, the methodology for calculating the buffer for additional losses to be included in provisional valuations.
ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

Resolution authorities shall take resolution actions referred to in Article 21 by applying any of the following resolution tools individually or in any combination:

the position and loss allocation tools;

the write-down and conversion tool;

the sale of business tool;

the bridge CCP tool.

In the event of a systemic crisis, a Member State may as a last resort provide extraordinary public financial support by applying government stabilisation tools in accordance with Articles 45, 46 and 47 on the condition of prior and final approval under the Union State aid framework and where credible arrangements for the timely and comprehensive recovery of the funds in accordance with paragraph 10 of this Article are provided for.

Prior to the application of the tools referred to in paragraph 1, the resolution authority shall enforce:

any existing and outstanding rights of the CCP, including any contractual obligations by clearing members to meet recovery cash calls, to provide additional resources to the CCP, or to take on positions of defaulting clearing members, whether through an auction or other agreed means in the CCP’s operating rules;

any existing and outstanding contractual obligation committing parties other than clearing members to any forms of financial support.

The resolution authority may partially enforce the contractual obligations referred to in points (a) and (b) where it is not possible to enforce those contractual obligations in full within a reasonable timeframe.

By way of derogation from paragraph 3, the resolution authority may refrain from enforcing the relevant existing and outstanding obligations either partially or in full to avoid significant adverse effects on the financial system or widespread contagion, or where the application of the tools referred to in paragraph 1 is more appropriate in order to achieve the resolution objectives in a timely manner.

In the event that the resolution authority refrains partially or fully from enforcing existing and outstanding obligations as set out in the second subparagraph of paragraph 3 or in paragraph 4 of this Article, the resolution authority may enforce the remaining obligations within 18 months after the CCP is considered to be failing or likely to fail in accordance with Article 22, provided that the reasons for refraining from enforcing those obligations no longer exist. The resolution authority shall notify the clearing member and other party three to six months before enforcing the remaining obligation. The proceeds from the enforced remaining obligations shall be used to recover the use of public funds.
The resolution authority shall, after consultation with the competent authorities and resolution authorities of the affected clearing members and any other parties committed by existing and outstanding obligations, determine whether the reasons for refraining from enforcing the existing and outstanding obligations have ceased to exist and whether to enforce remaining obligations. Where the resolution authority deviates from the views expressed by the authorities consulted, it shall provide duly justified reasons, in writing, for doing so.
The requirement to meet the remaining obligations in the circumstances referred to in this paragraph shall be included in the CCP’s rules and other contractual arrangements.

The resolution authority may require the CCP to compensate non-defaulting clearing members for their losses stemming from the application of loss allocation tools, where those losses are in excess of the losses that the non-defaulting clearing member would have borne under their obligations under the CCP’s operating rules, provided that the non-defaulting clearing member would have been entitled to the payment of the difference referred to in Article 62.
The compensation referred to in the first subparagraph may take the form of instruments of ownership, debt instruments or instruments recognising a claim on the CCP’s future profits.
The amount of instruments issued to each affected non-defaulting clearing member shall be proportionate to the excess loss referred to in the first subparagraph. It shall take account of any outstanding contractual obligations of the clearing members toward the CCP and be deducted from any entitlement to the payment of the difference referred to in Article 62.
The amount of instruments shall be based on the valuation conducted in accordance with Article 24(3).

Where one of the government stabilisation tools is applied, the resolution authority shall exercise the power to write down and convert any instruments of ownership and debt instruments or other unsecured liabilities before or together with the application of the government stabilisation tool.
Where the application of a resolution tool other than the write-down and conversion tool results in financial losses being borne by clearing members, the resolution authority shall exercise the power to write down and convert any instruments of ownership and debt instruments or other unsecured liabilities immediately before or together with the application of the resolution tool, unless applying a different sequence would minimise deviations from the ‘no creditor worse off’ principle set out in Article 60 and better achieve the resolution objectives.

Where only the resolution tools referred to in points (c) and (d) of paragraph 1 of this Article are applied, and only part of the assets, rights, obligations or liabilities of the CCP under resolution are transferred in accordance with Articles 40 and 42, the residual part of that CCP shall be wound up in accordance with normal insolvency proceedings.

National insolvency law rules relating to the voidability or unenforceability of legal acts detrimental to creditors shall not apply to transfers of assets, rights, obligations or liabilities from a CCP in relation to which resolution tools or government financial stabilisation tools are applied.

Member States shall recover over an appropriate period any public funds used as government financial stabilisation tools as referred to in Section 7 of this Chapter and resolution authorities shall recover any reasonable expenses incurred by them in connection with the application of the resolution tools or powers. Such recovery shall, inter alia, come from:

the CCP under resolution, as a preferred creditor, including any of its claims against defaulting clearing members;

any consideration paid by the purchaser to the CCP, as a preferred creditor prior to the application of Article 40(4), where the sale of business tool has been applied;

any proceeds generated as a result of the termination of the bridge CCP, as a preferred creditor prior to the application of Article 42(5);

any proceeds generated by the application of the public equity support tool referred to in Article 46 and the temporary public ownership tool referred to in Article 47, including the proceeds generated from their sale.

When applying the resolution tools, resolution authorities shall ensure, on the basis of a valuation that complies with Article 25, the restoration of a matched book, the full allocation of losses, the replenishment of the pre-funded resources of the CCP or the bridge CCP, and the recapitalisation of the CCP or the bridge CCP.
Resolution authorities shall ensure the replenishment of the pre-funded resources and the recapitalisation of the CCP or the bridge CCP as referred to in the first subparagraph, to an extent sufficient to restore the ability of the CCP or the bridge CCP to comply with the conditions for authorisation and to continue to carry out the critical functions of the CCP or the bridge CCP, taking into account the operating rules of the CCP or the bridge CCP.
Notwithstanding the application of other resolution tools, resolution authorities may apply the tools referred to in Articles 30 and 31 to recapitalise the CCP.

Resolution authorities shall apply the position allocation tool in accordance with Article 29 and the loss allocation tools in accordance with Articles 30 and 31.

Resolution authorities shall apply the tools referred to in paragraph 1 in respect of contracts relating to clearing services and the collateral related to those services posted to the CCP.

Resolution authorities shall apply the position allocation tool referred to in Article 29 in order to rematch the book of the CCP or bridge CCP where relevant.
Resolution authorities shall apply the loss allocation tools referred to in Articles 30 and 31 for any of the following purposes:

to cover the losses of the CCP assessed in accordance with Article 25;

to restore the ability of the CCP to meet payment obligations as they fall due;

to achieve the outcome referred to in points (a) and (b) in relation to a bridge CCP;

to support the transfer of the CCP’s business by way of the sale of business tool to a solvent third party.

The loss allocation tool referred to in Article 30 may be applied by the resolution authorities in relation to losses arising from a default event and in relation to losses arising from a non-default event. If the loss allocation tool referred to in Article 30 is applied in relation to losses arising from a non-default event, it shall only be applied up to a cumulative amount equivalent to the non-defaulting clearing members’ contribution to the CCP’s default funds and distributed among clearing members proportionally to their contributions to the default funds.

Resolution authorities shall not apply the loss allocation tools referred to in Articles 30 and 31 articles' class='internal-link article' href='#art_1.4' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='No text available' data-bs-placement='top' >1(4)nd 31 1(5) cles' class='internal-link article' href='#art_30' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Reduction of the value of any gains payable by the CCP to non-defaulting clearing members' data-bs-placement='top' >30 and 31 of this Regulation with regard to the entities referred to in Articles 30 4) an 31 articles' class='internal-link article' href='#art_1.4' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='No text available' data-bs-placement='top' >1(4) and 1(5) of OTC.

The resolution authority may terminate some or all of the following contracts of the CCP under resolution:
When using the power under the first subparagraph, the resolution authority shall terminate contracts referred to under each of points (a), (b) and (c) of the first subparagraph in a similar way, without discriminating between counterparties to those contracts, with the exception of those contractual obligations that cannot be enforced in a reasonable timeframe.

the contracts with the clearing member in default;

the contracts of the affected clearing service or asset class;

the other contracts of the CCP under resolution.

The resolution authority shall terminate the contracts referred to in point (a) of the first subparagraph of this paragraph only where the transfer of the assets and positions resulting from those contracts has not taken place within the meaning of Article 48(5) and (6) of OTC.

The resolution authority shall give notice to all relevant clearing members of the date on which any contract referred to in paragraph 1 is terminated.

Prior to the termination of any of the contracts referred to in paragraph 1, the resolution authority shall take the following steps:

require the CCP under resolution to value each contract, and update the account balances of each clearing member;

determine the net amount payable by or to each clearing member, taking account of any due but unpaid variation margin, including variation margin due as a result of the contract valuations referred to in point (a); and

notify each clearing member of the determined net amounts and require the CCP to pay or collect them accordingly.

The clearing members shall, without undue delay, communicate the application of such tool to their clients and the way in which such application affects them.

The valuation referred in point (a) of paragraph 3 shall be based, as far as possible, on a fair market price determined on the basis of the CCP’s own rules and arrangements, unless the resolution authority deems necessary the use of another appropriate price discovery method.

Where a non-defaulting clearing member is unable to pay the net amount determined in accordance with paragraph 3 of this Article, the resolution authority may, having regard to Article 21 of this Regulation, require the CCP to place the non-defaulting clearing member in default and use its initial margin and default fund contribution in accordance with Article 45 of OTC.

Where the resolution authority has terminated one or more contracts of the types referred to in paragraph 1, it may temporarily prevent the CCP from clearing any new contract of the same type as the one terminated.
The resolution authority may allow the CCP to resume the clearing of those types of contracts only where the following conditions are met:

the CCP complies with the requirements of OTC; and

the resolution authority issues and publishes a notice to that effect using the means referred to in Article 72(3).

ESMA shall by 12 February 2022 issue guidelines in accordance with Article 16 of ESAESMAR further specifying the methodology to be used by the resolution authority for determining the valuation referred in point (a) of paragraph 3 of this Article.

The resolution authority may reduce the amount of the CCP’s payment obligations to non-defaulting clearing members where those obligations arise from gains due in accordance with the CCP’s processes for paying variation margin or a payment that has the same economic effect.

The resolution authority shall calculate any reduction in payment obligations referred to in paragraph 1 of this Article using an equitable allocation mechanism determined in the valuation conducted in accordance with Article 24(3) and communicated to the clearing members as soon as the resolution tool is applied. The clearing members shall, without undue delay, communicate the application of such tool to their clients and the way in which such application affects them. The total net gains to be reduced for each clearing member shall be proportional to the amounts due from the CCP.

The reduction in the value of gains payable shall take effect and shall be immediately binding on the CCP and affected clearing members from the moment at which the resolution authority takes the resolution action.

A non-defaulting clearing member shall not have any claim in any subsequent proceedings against the CCP, or its successor entity, arising from the reduction in payment obligations referred to in paragraph 1.
The first subparagraph of this paragraph shall not prevent resolution authorities from requiring the CCP to reimburse clearing members, where the level of reduction based on the provisional valuation referred to in Article 26(1) is found to exceed the level of reduction required based on the definitive valuation referred to in Article 26(2).

Where a resolution authority reduces only in part the value of gains payable, the residual outstanding payable amount shall still be owed to the non-defaulting clearing member.

The CCP shall include in its operating rules reference to the power to reduce payment obligations referred to in paragraph 1 in addition to any similar arrangements provided for in those operating rules at the recovery stage and shall ensure that contractual arrangements are concluded to allow the resolution authority to exercise its powers under this Article.

The resolution authority may require non-defaulting clearing members to make a contribution in cash to the CCP up to twice the amount equivalent to their contribution to the CCP’s default fund. This obligation to make a contribution in cash shall also be included in the CCP’s rules and other contractual arrangements as a resolution cash call reserved to the resolution authority taking resolution action. Where the resolution authority calls for an amount in excess of the contribution to the default fund, it shall do so after assessing the impact of this tool on non-defaulting clearing members and the financial stability of Member States, in cooperation with the resolution authorities of non-defaulting clearing members.
Where the CCP operates multiple default funds and the tool is applied to address a default event, the amount of the contribution in cash referred to in the first subparagraph shall refer to the contribution of the clearing member to the default fund of the affected clearing service or asset class.
Where the CCP operates multiple default funds and the tool is applied to address a non-default event, the amount of the contribution in cash referred to in the first subparagraph shall refer to the sum of the contributions of the clearing member to all default funds of the CCP.
The resolution authority may exercise the resolution cash call regardless of whether all contractual obligations requiring cash contributions from non-defaulting clearing members have been exhausted.
The resolution authority shall determine the amount of the cash contribution of each non-defaulting clearing member in proportion to its contribution to the default fund up to the limit referred in the first subparagraph.
The resolution authority may require the CCP to reimburse clearing members the possible excess amount of a resolution cash call where the level of the resolution cash call applied based on a provisional valuation according to Article 26(1) is found to exceed the required level based on the definitive valuation referred to in Article 26(2).

If a non-defaulting clearing member does not pay the required amount, the resolution authority may require the CCP to place that clearing member in default and use its initial margin and default fund contribution in accordance with Article 45 of OTC up to the required amount.

The resolution authority shall apply the write-down and conversion tool in accordance with Article 33 in respect of instruments of ownership and debt instruments issued by the CCP under resolution or other unsecured liabilities in order to absorb losses, recapitalise that CCP or a bridge CCP, or to support the application of the sale of business tool.

Based on the valuation carried out in accordance with Article 24(3), the resolution authority shall determine the following:

the amount by which the instruments of ownership and debt instruments or other unsecured liabilities must be written down taking into account any losses that are to be absorbed by the enforcement of any outstanding obligations of the clearing members or other third parties owed to the CCP; and

the amount by which debt instruments or other unsecured liabilities must be converted into instruments of ownership in order to restore the capital requirements of the CCP or the bridge CCP.

The resolution authority shall apply the write-down and conversion tool in accordance with the priority of claims applicable under normal insolvency proceedings.

Prior to reducing or converting the principal amount of debt instruments or other unsecured liabilities, the resolution authority shall reduce the nominal amount of instruments of ownership in proportion to the losses and up to their full value, where necessary.
Where, in accordance with the valuation carried out pursuant to Article 24(3), the CCP maintains a positive net value after the reduction of the nominal amount of instruments of ownership, the resolution authority shall cancel or dilute, as the case may be, those instruments of ownership.

The resolution authority shall reduce, convert, or both, the principal amount of debt instruments or other unsecured liabilities to the extent required to achieve the resolution objectives, and up to the full value of those instruments or liabilities, where necessary.

The resolution authority shall not apply the write-down and conversion tool in respect of the following liabilities:

liabilities to employees, in relation to accrued salary, pension benefits or other fixed remuneration, except for any variable component of remuneration that is not regulated by a collective bargaining agreement;

liabilities to commercial or trade creditors arising from the provision to the CCP of goods or services that are critical to the daily functioning of its operations, including IT services, utilities and the rental, servicing and upkeep of premises;

liabilities to tax and social security authorities, provided that those liabilities are preferred liabilities under the applicable insolvency law;

liabilities owed to systems or operators of systems designated according to SFIPSSSD, to participants to the extent that the liabilities result from their participation in such systems, to other CCPs, and to central banks;

initial margins.

Where the nominal amount of an instrument of ownership or the principal amount of a debt instrument or other unsecured liabilities is reduced, the following conditions shall apply:

that reduction shall be permanent;

the holder of the instrument shall have no claim in connection with that reduction, except for any liability already accrued, any liability for damages that may arise as a result of an appeal challenging the legality of that reduction, any claim based on instruments of ownership issued or transferred pursuant to paragraph 6 of this Article, or any claim for payment in accordance with Article 62; and

where that reduction is only partial, the agreement that created the original liability shall continue to apply in respect of the residual amount subject to any necessary amendments of the terms of that agreement due to the reduction.

Point (a) of the first subparagraph shall not prevent resolution authorities from applying a write-up mechanism to reimburse holders of debt instruments or other unsecured liabilities and then holders of instruments of ownership, where the level of write-down applied based on the provisional valuation referred to in Article 26(1) is found to exceed the amounts required based on the definitive valuation referred to in Article 26(2).

Where converting debt instruments or other unsecured liabilities pursuant to paragraph 3, the resolution authority may require the CCP to issue or to transfer instruments of ownership to the holders of the debt instruments or other unsecured liabilities.

The resolution authority shall only convert debt instruments or other unsecured liabilities pursuant to paragraph 3 where the following conditions are met:

the instruments of ownership are issued prior to any issuance of instruments of ownership by the CCP for the purposes of provision of own funds by the State or a government entity; and

the conversion rate represents appropriate compensation to the affected debt holders for any loss incurred as a result of the exercise of the write-down and conversion powers, in line with their treatment under normal insolvency proceedings.

Following any conversion of debt instruments or other unsecured liabilities to instruments of ownership, the latter shall be subscribed or transferred without delay after the conversion.

For the purposes of paragraph 7, the resolution authority shall ensure, in the context of drawing up and maintaining the CCP’s resolution plan and as part of the powers to remove impediments to the resolvability of the CCP, that the CCP is at all times able to issue the necessary number of instruments of ownership.

The resolution authority shall complete or require the completion of all the administrative and procedural tasks necessary to give effect to the application of the write-down and conversion tool, including:

the amendment of all relevant registers;

the delisting or removal from trading of instruments of ownership or debt instruments;

the listing or admission to trading of new instruments of ownership; and

the relisting or readmission of any debt instruments which have been written down, without the requirement for the issuing of a prospectus in accordance with Regulation 2017/1129 of the European Parliament and of the Council ( 24 ) .

Where Article 32(1) is applied, the competent authority shall require the CCP to maintain at all times a sufficient amount of instruments of ownership to ensure that the CCP may issue sufficient new instruments of ownership and that the issuance of or conversion into instruments of ownership could be carried out effectively.

The resolution authority shall apply the write-down and conversion tool regardless of any provisions in the CCP’s instruments of incorporation or statutes, including with respect to pre-emption rights for shareholders or requirements for the consent of shareholders to an increase of capital.

CCPs shall, within one month after the application of the tools referred to in Article 32, conduct a review of the causes of its failure and submit it to the resolution authority alongside a business reorganisation plan in accordance with Article 37. Where the Union State aid framework is applicable, that plan, including following any amendments in accordance with Article 38 and as implemented in accordance with Article 39, shall be compatible with the restructuring plan that the CCP is required to submit to the Commission in accordance with that framework.
Where necessary for achieving the resolution objectives, the resolution authority may extend the period referred to in the first subparagraph up to a maximum of two months.

Where a restructuring plan is required to be notified under the Union State aid framework, the submission of the business reorganisation plan shall be without prejudice to the deadline laid down by that framework for the submission of that restructuring plan.

The resolution authority shall submit the review and the business reorganisation plan, and any revised plan in accordance with Article 38, to the competent authority and to the resolution college.

The business reorganisation plan referred to in Article 36 shall set out measures aiming to restore the long-term viability of the CCP or parts of its business within a reasonable timeframe. Those measures shall be based on realistic assumptions as to the economic and financial market conditions under which the CCP will operate.
The business reorganisation plan shall take account of the current and potential states of the financial markets and reflect best-case and worst-case assumptions, including a combination of events to identify the CCP’s main vulnerabilities. Assumptions shall be compared with appropriate sector-wide benchmarks.

The business reorganisation plan shall include at least the following elements:

a detailed analysis of the factors and circumstances that caused the CCP to fail or to be likely to fail;

a description of the measures to be adopted to restore the CCP’s long-term viability; and

a timetable for the implementation of those measures.

Measures aiming to restore the long-term viability of a CCP may include:

the reorganisation and restructuring of the activities of the CCP;

changes to the CCP’s operational systems and infrastructure;

the sale of assets or of business lines;

changes to the CCP’s risk management.

ESMA shall by 12 February 2023 develop draft regulatory technical standards to specify further the minimum elements that should be included in a business reorganisation plan pursuant to paragraph 2.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

Within one month of the submission of the business reorganisation plan by the CCP pursuant to Article 36(1), the resolution authority and the competent authority shall assess whether the measures provided for in that plan would reliably restore the long-term viability of the CCP.
Where the resolution authority and the competent authority are satisfied that the plan would restore the CCP’s long-term viability, the resolution authority shall approve the plan.

Where the resolution authority or the competent authority are not satisfied that the measures provided for in the plan would restore the CCP’s long-term viability, the resolution authority shall notify the CCP of their concerns and require it to resubmit an amended plan addressing those concerns within two weeks of the notification.

The resolution authority and the competent authority shall assess the resubmitted plan and the resolution authority shall notify the CCP within one week of the reception of that plan whether the concerns are appropriately addressed or whether further amendments are required.

ESMA shall by 12 February 2023 develop draft regulatory technical standards to specify the criteria that a business reorganisation plan is to fulfil for approval by the resolution authority pursuant to paragraph 1.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

The CCP shall implement the business reorganisation plan and shall submit a report to the resolution authority and the competent authority as requested and, at least, every six months on its progress in implementing that plan.

The resolution authority, in agreement with the competent authority, may require the CCP to revise the plan where necessary to achieve the aim referred to in Article 37(1).

The resolution authority may transfer the following to a purchaser that is not a bridge CCP:

instruments of ownership issued by a CCP under resolution;

any assets, rights, obligations or liabilities of a CCP under resolution.

The transfer referred to in the first subparagraph shall take place without obtaining the consent of the shareholders of the CCP, or any third party other than the purchaser and without complying with any procedural requirements under company or securities law other than those provided for in Article 41.

A transfer made pursuant to paragraph 1 shall be made on commercial terms, having regard to the circumstances, and in accordance with the Union State aid framework.
For the purposes of the first subparagraph of this paragraph, the resolution authority shall take all reasonable steps to obtain commercial terms that conform to the valuation conducted under Article 24(3).

Subject to Article 27(10), any consideration paid by the purchaser shall benefit:

the owners of the instruments of ownership where the sale of business has been effected by transferring instruments of ownership issued by the CCP under resolution from the holders of those instruments to the purchaser;

the CCP under resolution, where the sale of business has been effected by transferring some or all of the assets or liabilities of the CCP to the purchaser;

any non-defaulting clearing members that have suffered losses resulting from the application of the resolution tools in resolution, proportionate to their losses in resolution.

The allocation of any consideration paid by the purchaser in accordance with paragraph 3 of this Article shall be carried out as follows:

upon the occurrence of an event covered by the CCP’s default waterfall as set out in Articles 43 and 45 of OTC, in a reversal of the order in which the losses have been imposed by the CCP’s default waterfall; or

upon the occurrence of an event not covered by the CCP’s default waterfall as set out in Articles 43 and 45 of OTC, in a reversal of the order in which the losses were allocated in accordance with any applicable rules of the CCP.

The allocation of any remaining consideration shall then be carried out in accordance with the priority of claims under normal insolvency proceedings.

The resolution authority may exercise the transfer power referred to in paragraph 1 more than once in order to make supplemental transfers of instruments of ownership issued by the CCP or, as the case may be, the CCP’s assets, rights, obligations, or liabilities.

The resolution authority may, with the consent of the purchaser, transfer the assets, rights, obligations or liabilities that had been transferred to the purchaser back to the CCP under resolution, or the instruments of ownership back to their original owners.
Where the resolution authority uses the transfer power referred to in the first subparagraph, the CCP under resolution or original owners shall be obliged to take back any such assets, rights, obligations or liabilities, or instruments of ownership.

Any transfer made pursuant to paragraph 1 shall take place irrespective of whether the purchaser is authorised to provide the services and carry out the activities resulting from the acquisition.
Where the purchaser is not authorised to provide the services and carry out the activities resulting from the acquisition, the resolution authority, in consultation with the competent authority, shall conduct an appropriate due diligence assessment of the purchaser and ensure that the purchaser has the professional and technical capacity to perform the functions of the purchased CCP and that it applies for authorisation as soon as practicable and, at the latest, within one month of the application of the sale of business tool. The competent authority shall ensure that any such application for authorisation is considered in an expedited manner.

Where the transfer of instruments of ownership referred to in paragraph 1 of this Article results in the acquisition of or increase in a qualifying holding referred to in Article 31(2) of OTC, the competent authority shall carry out the assessment referred to in that Article within a period that neither delays the application of the sale of business tool nor prevents the resolution action from achieving the relevant resolution objectives.

Where the competent authority has not completed the assessment referred to in paragraph 8 by the date on which the transfer of instruments of ownership takes effect, the following shall apply:

the transfer of instruments of ownership shall have immediate legal effect from the date on which they are transferred;

during the assessment period and during any divestment period provided for in point (f) of this paragraph, the purchaser’s voting rights attached to those instruments of ownership shall be suspended and vested solely in the resolution authority, which shall have no obligation to exercise them and, unless the act or omission implies gross negligence or serious misconduct, shall not be liable for exercising or refraining from exercising them;

during the assessment period and during any divestment period provided for in point (f) of this paragraph, any penalties provided for in Article 22(3) of OTC or measures for infringing the requirements for acquisitions or disposals of qualifying holdings provided for in Article 30 of OTC shall not apply to that transfer;

the competent authority shall notify the resolution authority and the purchaser in writing of the result of its assessment in accordance with Article 32 of OTC promptly after completing its assessment;

where the competent authority does not oppose the transfer, the voting rights attached to those instruments of ownership shall be deemed to be fully vested in the purchaser as from the notification referred to in point (d) of this paragraph;

where the competent authority opposes the transfer of instruments of ownership, point (b) shall continue to apply and the resolution authority may, having taken into account market conditions, establish a divestment period within which the purchaser shall divest such instruments of ownership.

For the purposes of exercising its right to provide services in accordance with OTC, the purchaser shall be considered to be a continuation of the CCP under resolution, and may continue to exercise any such right that was exercised by the CCP under resolution in respect of the assets, rights, obligations or liabilities transferred.

The purchaser referred to in paragraph 1 shall not be prevented from exercising the CCP’s rights of membership and accessing the payment and settlement systems and other linked FMIs and trading venues provided that the purchaser meets the criteria for membership or participation in those systems or infrastructures or trading venues.
Notwithstanding the first subparagraph, the purchaser shall not be denied access to payment and settlement systems, and other linked FMIs and trading venues, on the ground that the purchaser does not possess a rating from a credit rating agency, or that that rating is below the rating levels required to be granted access to those systems or infrastructures or trading venues.
Where the purchaser does not meet the criteria referred to in the first subparagraph, the purchaser may continue to exercise the CCP’s rights of membership and accessing those systems and other infrastructures and trading venues for the period specified by the resolution authority. That period shall not exceed 12 months.

Unless otherwise provided for in this Regulation, shareholders, creditors, clearing members and clients of the CCP under resolution and other third parties whose assets, rights, obligations or liabilities are not transferred shall have no rights over, or in relation to, the assets, rights, obligations or liabilities transferred.

Where applying the sale of business tool in relation to a CCP, the resolution authority shall advertise the availability, or make arrangements for the marketing, of the assets, rights, obligations, liabilities, or the instruments of ownership intended to be transferred. Pools of rights, assets, obligations and liabilities may be marketed separately.

Without prejudice to the Union State aid framework, where applicable, the marketing referred to in paragraph 1 shall be carried out in accordance with the following criteria:

it shall be as transparent as possible and not materially misrepresent the assets, rights, obligations, liabilities, or instruments of ownership of the CCP, having regard to the circumstances and in particular the need to maintain financial stability;

it shall not unduly favour or discriminate between potential purchasers;

it shall be free from any conflict of interest;

it shall take account of the need to effect a rapid resolution action; and

it shall aim to maximise, as far as possible, the sale price for the instruments of ownership, assets, rights, obligations or liabilities involved.

The criteria referred to in the first subparagraph shall not prevent the resolution authority from soliciting particular potential purchasers.

By way of derogation from paragraphs 1 and 2, the resolution authority may apply the sale of business tool without complying with the requirement to market, or may market the assets, rights, obligations, liabilities or the instruments of ownership where it determines that compliance with that requirement or with those criteria would be likely to undermine one or more of the resolution objectives, including by creating a material threat to financial stability.

The resolution authority may transfer to a bridge CCP the following:

instruments of ownership issued by a CCP under resolution;

any assets, rights, obligations or liabilities of the CCP under resolution.

The transfer referred to in the first subparagraph may take place without obtaining the consent of the shareholders of the CCP under resolution or any third party other than the bridge CCP and without complying with any procedural requirements under company or securities law other than those provided for in Article 43.

The bridge CCP shall be a legal person that:

is controlled by the resolution authority and is wholly or partially owned by one or more public authorities which may include the resolution authority; and

is established or used for the purpose of receiving and holding some or all of the instruments of ownership issued by a CCP under resolution or some or all of the assets, rights, obligations and liabilities of the CCP with a view to maintaining the critical functions of the CCP and subsequently selling the CCP.

When applying the bridge CCP tool, the resolution authority shall ensure that the total value of liabilities and obligations transferred to the bridge CCP does not exceed the total value of the rights and assets transferred from the CCP under resolution.

Subject to Article 27(10), any consideration paid by the bridge CCP shall benefit:

the owners of the instruments of ownership, where the transfer to the bridge CCP has been effected by transferring instruments of ownership issued by the CCP under resolution from the holders of those instruments to the bridge CCP;

the CCP under resolution, where the transfer to the bridge CCP has been effected by transferring some or all of the assets or liabilities of that CCP to the bridge CCP;

any non-defaulting clearing members that have suffered losses following the application of the resolution tools in resolution, proportionate to their losses in resolution.

The allocation of any consideration paid by the bridge CCP in accordance with paragraph 4 of this Article shall be carried out as follows:

upon the occurrence of an event covered by the CCP’s default waterfall as set out in Articles 43 and 45 of OTC, in a reversal of the order in which the losses have been imposed by the CCP’s default waterfall; or

upon the occurrence of an event not covered by the CCP’s default waterfall as set out in Articles 43 and 45 of OTC, in a reversal of the order in which the losses were allocated in accordance with any applicable rules of the CCP.

The allocation of any remaining consideration shall be carried out in accordance with the priority of claims under normal insolvency proceedings.

The resolution authority may exercise the transfer power referred to in paragraph 1 more than once in order to make supplemental transfers of instruments of ownership issued by a CCP or of its assets, rights, obligations or liabilities.

The resolution authority may transfer the rights, obligations, assets or liabilities that had been transferred to the bridge CCP back to the CCP under resolution, or the instruments of ownership back to their original owners where that transfer is expressly provided for in the instrument by which the transfer referred to in paragraph 1 is made.
Where the resolution authority uses the transfer power referred to in the first subparagraph, the CCP under resolution or original owners shall be obliged to take back any such assets, rights, obligations or liabilities, or instruments of ownership, provided that the conditions in the first subparagraph of this paragraph or in paragraph 8 are met.

Where the specific instruments of ownership, assets, rights, obligations or liabilities do not fall within the classes of, or meet the conditions for transfer of, instruments of ownership, assets, rights, obligations or liabilities specified in the instrument by which the transfer was made, the resolution authority may transfer them from the bridge CCP back to the CCP under resolution or the original owners.

A transfer referred to in paragraphs 7 and 8 may be made at any time, and shall comply with any other conditions stated in the instrument by which the transfer was made for the relevant purpose.

The resolution authority may transfer instruments of ownership or assets, rights, obligations or liabilities from the bridge CCP to a third party.

For the purposes of exercising its right to provide services in accordance with OTC, a bridge CCP shall be considered to be a continuation of the CCP under resolution and may continue to exercise any such right that was exercised by the CCP under resolution in respect of the assets, rights, obligations or liabilities transferred.
For any other purposes, resolution authorities may require that a bridge CCP be considered to be a continuation of the CCP under resolution, and be able to continue to exercise any right that was exercised by the CCP under resolution in respect of the assets, rights, obligations or liabilities transferred.

The bridge CCP shall not be prevented from exercising the CCP’s rights of membership and accessing payment and settlement systems and other linked FMIs and trading venues, provided that it meets the criteria for membership and participation in those systems or FMIs or trading venues.
Notwithstanding the first subparagraph, the bridge CCP shall not be denied access to payment and settlement systems and other FMIs and trading venues on the ground that the bridge CCP does not possess a rating from a credit rating agency, or that that rating is below the rating levels required to be granted access to those systems or infrastructures or trading venues.
Where the bridge CCP does not meet the criteria referred to in the first subparagraph, the bridge CCP may continue to exercise the CCP’s rights of membership and accessing those systems and other infrastructures and trading venues for a period specified by the resolution authority. That period shall not exceed 12 months.

Shareholders, creditors, clearing members and clients of the CCP under resolution and other third parties whose assets, rights, obligations or liabilities are not transferred to the bridge CCP, shall have no rights over, or in relation to, the assets, rights, obligations or liabilities transferred to the bridge CCP, or against its board or senior management.

The bridge CCP shall have no duty or responsibility to shareholders or creditors of the CCP under resolution, and the board or senior management of the bridge CCP shall have no liability to those shareholders or creditors for acts and omissions in the discharge of their duties, unless the act or omission is due to gross negligence or serious misconduct in accordance with applicable national law.

The bridge CCP shall comply with all of the following requirements:

the bridge CCP shall seek the approval of the resolution authority for all of the following:

the rules of incorporation of the bridge CCP;

the members of the bridge CCP’s board, where those members are not directly appointed by the resolution authority;

the responsibilities and remuneration of the members of the bridge CCP’s board, where the remuneration and the responsibilities are not determined by the resolution authority; and

the strategy and risk profile of the bridge CCP; and

the bridge CCP shall take over the authorisations of the CCP under resolution to provide the services or carry out the activities resulting from the transfer referred to in Article 42(1) of this Regulation in accordance with OTC. Notwithstanding point (b) of the first subparagraph and where necessary to meet the resolution objectives, the bridge CCP may be authorised without complying with OTC for a short period at the beginning of its operation. To that end, the resolution authority shall submit a request for such authorisation to the competent authority. If the competent authority decides to grant such authorisation, it shall indicate the period for which the bridge CCP’s obligation to comply with the requirements of OTC is waived. That period shall not exceed 12 months. During that period, the bridge CCP shall be considered as a qualifying CCP as defined in point (88) of Article 4(1) of PRCIIFR for the purposes of that Regulation. Notwithstanding the period referred to in the second subparagraph, in the case of prudential requirements under Chapter 3 of Title IV of OTC, the waiver shall only be for a period of up to three months. It may be extended for one or two further periods of up to three months if necessary to achieve the resolution objectives.

Subject to any restrictions imposed in accordance with Union or national competition rules, the management of the bridge CCP shall operate the bridge CCP with the objective of maintaining continuity of the bridge CCP’s critical functions and selling the bridge CCP or any of its assets, rights, obligations and liabilities to one or more private sector purchasers. That sale shall take place when market conditions are appropriate, and within the period specified in paragraphs 5 and, where applicable, 6.

The resolution authority shall take a decision that the bridge CCP is no longer a bridge CCP within the meaning of Article 42(2) in any of the following cases:

the resolution objectives are fulfilled;

the bridge CCP merges with another entity;

the bridge CCP ceases to meet the requirements laid down in Article 42(2);

the bridge CCP or substantially all of its assets, rights, obligations or liabilities have been sold in accordance with paragraphs 2 and 4 of this Article;

the period specified in paragraph 5 of this Article or, where applicable, paragraph 6 of this Article expires;

the contracts cleared by the bridge CCP have been settled, have expired or have been closed out and the CCP’s rights and obligations relating to those contracts are thereby completely discharged.

Before selling the bridge CCP or its assets, rights, obligations or liabilities, the resolution authority shall advertise the availability of the elements intended to be sold, and shall ensure that they are marketed openly and transparently, and that they are not materially misrepresented.
The resolution authority shall carry out the sale referred to in the first subparagraph on commercial terms and shall not unduly favour or discriminate between potential purchasers.

The resolution authority shall terminate the operation of a bridge CCP two years after the date on which the last transfer from the CCP under resolution is made.
Where the resolution authority terminates the operation of a bridge CCP, it shall request the competent authority to withdraw the bridge CCP’s authorisation.

The resolution authority may extend the period referred to in paragraph 5 for one or more additional one-year periods where the extension is necessary to achieve the outcomes referred to in points (a) to (d) of paragraph 3.
The decision to extend the period referred to in paragraph 5 shall be reasoned and shall contain a detailed assessment of the bridge CCP’s situation in relation to relevant market conditions and market outlook.

Where the operations of a bridge CCP are terminated in the circumstances referred to in point (d) or (e) of paragraph 3, the bridge CCP shall be wound up under normal insolvency proceedings.
Unless otherwise provided for in this Regulation, any proceeds generated as a result of the termination of the bridge CCP shall benefit its shareholders.
Where a bridge CCP is used for the purpose of transferring assets and liabilities of more than one CCP under resolution, the proceeds referred to in the second subparagraph shall be attributed by reference to the assets and liabilities transferred from each of the CCPs under resolution.

The resolution authority may enter into contracts to borrow or obtain other forms of financial support, including from pre-funded resources available in any non-depleted default funds in the CCP under resolution, where necessary to meet temporary liquidity needs in order to ensure the effective application of the resolution tools.

In the very extraordinary situation of a systemic crisis, Member States may apply the government stabilisation tools in accordance with Articles 46 and 47 for the purpose of resolving a CCP only where the following conditions are met:

the financial support is necessary to meet the resolution objectives referred to in Article 21;

the financial support is used only as a last resort in accordance with paragraph 3 of this Article after having assessed and exploited all resolution tools to the maximum extent practicable whilst maintaining financial stability;

the financial support is limited in time;

the financial support complies with the Union State aid framework; and

the Member State has, in advance, defined comprehensive and credible arrangements, in a manner consistent with the Union state aid framework, for recovering, over a suitable period, and in accordance with Article 27(10) the public funds deployed, to the extent not retrieved in full through the sale to private purchasers in accordance with Article 46(3) or 47(2).

The application of government stabilisation tools shall be carried out in accordance with national law either under the leadership of the competent ministry or government in close cooperation with the resolution authority or under the leadership of the resolution authority.

To give effect to the government financial stabilisation tools, competent ministries or governments shall have the relevant resolution powers specified in Articles 48 to 58 'articles' class='internal-link article' href='#art_52' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Power to enforce crisis prevention measures or resolution actions by other Member States' data-bs-placement='top' >52 t 54 58 72 cles' class='internal-link article' href='#art_48' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='General powers' data-bs-placement='top' >48 to 58, and shall ensure that Articles 48, 54 58 'articles' class='internal-link article' href='#art_52' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Power to enforce crisis prevention measures or resolution actions by other Member States' data-bs-placement='top' >52, 54 and 72 are complied with.

Government financial stabilisation tools shall be deemed to be applied as a last resort for the purposes of point (b) of paragraph 1 where at least one of the following conditions is met:

the competent ministry or government and the resolution authority, after consulting the central bank and the competent authority, determine that the application of remaining resolution tools would not suffice to avoid a significant adverse effect on the financial system;

the competent ministry or government and the resolution authority determine that the application of remaining resolution tools would not suffice to protect the public interest, where extraordinary liquidity assistance from the central bank has previously been given to the CCP;

in respect of the temporary public ownership tool, the competent ministry or government, after consulting the competent authority and the resolution authority, determines that the application of remaining resolution tools would not suffice to protect the public interest, where public equity support through the equity support tool has previously been given to the CCP.

Public financial support may be provided for the recapitalisation of a CCP in exchange for instruments of ownership.

CCPs subject to the public equity support tool shall be managed on a commercial and professional basis.

The instruments of ownership referred to in paragraph 1 shall be sold to a private purchaser as soon as commercial and financial circumstances allow.

A CCP may be taken into temporary public ownership by means of one or more transfer orders of instruments of ownership executed by a Member State to a transferee which is either of the following:

a nominee of the Member State; or

a company wholly owned by the Member State.

CCPs subject to the temporary public ownership tool shall be managed on a commercial and professional basis and, having regard to the possibility of recovering the cost of resolution, shall be sold to a private purchaser as soon as commercial and financial circumstances allow. In determining the timing of the sale of the CCP, the financial situation and relevant market conditions shall be taken into account.

The resolution authority shall have all the powers necessary to apply the resolution tools effectively, including all the following powers:

to require any person to provide the resolution authority with any information it requires to decide upon and prepare a resolution action, including updates and additional information to that provided in the resolution plan or required through on-site inspections;

to take control of a CCP under resolution and exercise all the rights and powers conferred upon holders of instruments of ownership and the CCP’s board including the rights and powers under the operating rules of the CCP;

to transfer instruments of ownership issued by a CCP under resolution;

to transfer to another entity, with its consent, the CCP’s rights, assets, obligations or liabilities;

to reduce, including to reduce to zero, the principal amount of or outstanding amount due in respect of debt instruments or other unsecured liabilities of a CCP under resolution;

to convert debt instruments or other unsecured liabilities of a CCP under resolution into instruments of ownership of that CCP or of a bridge CCP to which assets, rights, obligations or liabilities of the CCP under resolution have been transferred;

to cancel debt instruments issued by a CCP under resolution;

to reduce, including to reduce to zero, the nominal amount of instruments of ownership of a CCP under resolution and to cancel such instruments of ownership;

to require a CCP under resolution to issue new instruments of ownership, including preference shares and contingent convertible instruments;

with regards to debt instruments and other liabilities of the CCP, to amend or alter their maturity, amend the amount of interest payable, or amend the date on which interest becomes payable, including by suspending payment for a temporary period;

to close out and terminate financial contracts;

to remove or replace the board and senior management of a CCP under resolution;

to require the competent authority to assess the buyer of a qualifying holding in a timely manner by way of derogation from the time-limits laid down in Article 31 of OTC;

to reduce, including to reduce to zero, the amount of variation margin due to a clearing member of a CCP under resolution;

to transfer open positions and any related assets, including relevant title transfer and security financial collateral arrangements, set-off arrangements, and netting arrangements, from the account of a defaulting clearing member to a non-defaulting clearing member in a manner consistent with Article 48 of OTC;

to enforce any existing and outstanding contractual obligations of the clearing members of the CCP under resolution or, where necessary to achieve the resolution objectives, refrain from enforcing such contractual obligations or otherwise deviate from the CCP’s operating rules;

to enforce any existing and outstanding obligations of the parent undertaking of the CCP under resolution including to provide the CCP with financial support by way of guarantees or credit lines; and

to require clearing members to provide further contributions in cash subject to the limit referred to in Article 31.

Resolution authorities may exercise the powers referred to in the first subparagraph individually or in any combination.

Unless otherwise provided for in this Regulation and the Union State aid framework, the resolution authority shall not be subject to any of the following requirements where it exercises the powers referred to in paragraph 1:

requirement to obtain approval or consent from any public or private person;

requirements relating to the transfer of financial instruments, rights, obligations, assets or liabilities of a CCP under resolution or a bridge CCP;

requirement to notify any public or private person;

requirement to publish any notice or prospectus;

requirement to file or register any document with any other authority.

Where a power referred to in Article 48(1) of this Regulation is exercised, the resolution authority may also exercise any of the following ancillary powers:

subject to Article 67, to provide for a transfer to take effect free from any liability or encumbrance affecting the financial instruments, rights, obligations, assets or liabilities transferred;

to remove rights to acquire further instruments of ownership;

to require the relevant authority to discontinue or suspend the admission to trading on a regulated market, or the official listing, of any financial instruments issued by the CCP pursuant to Directive 2001/34 of the European Parliament and of the Council ( 25 ) ;

to provide for the purchaser or bridge CCP, pursuant to Articles 40 and 42 respectively, to be treated as if it were the CCP under resolution, for the purposes of any rights or obligations of, or actions taken by, the CCP under resolution, including any rights or obligations relating to participation in a market infrastructure;

to require the CCP under resolution or the purchaser or bridge CCP, where relevant, to provide the other with information and assistance;

to provide for the clearing member which is a recipient of any positions allocated to it by way of the powers in points (o) and (p) of Article 48(1) to assume any rights or obligations relating to participation in the CCP in relation to those positions;

to cancel or modify the terms of a contract to which the CCP under resolution is a party or substitute the purchaser or bridge CCP, in place of the CCP under resolution, as a party;

to modify or amend the operating rules of the CCP under resolution, including as regards its terms of access to clearing for its clearing members and other participants;

to transfer the membership of a clearing member from the CCP under resolution to a purchaser of the CCP or a bridge CCP.

Any right of compensation provided for in this Regulation shall not be considered to be a liability or an encumbrance for the purposes of point (a) of the first subparagraph.

The resolution authority may provide for continuity arrangements necessary to ensure that the resolution action is effective and that the business transferred may be operated by the purchaser or bridge CCP. Those continuity arrangements may include:

the continuity of contracts entered into by the CCP under resolution, in order for the purchaser or bridge CCP to assume the rights and liabilities of the CCP under resolution relating to any financial instrument, right, obligation, asset or liability that has been transferred and to replace the CCP under resolution, expressly or implicitly, in all relevant contractual documents;

the replacement of the CCP under resolution by the purchaser or bridge CCP in any legal proceedings relating to any financial instrument, right, obligation, asset or liability that has been transferred.

The powers provided for in point (d) of paragraph 1, and point (b) of paragraph 2, of this Article shall not affect:

the right of an employee of the CCP to terminate a contract of employment; nor

subject to Articles 55, 56 and 57, the exercise of contractual rights of a party to a contract, including the right to terminate, where provided for in the terms of the contract, due to an act or omission by the CCP prior to the transfer, or by the purchaser or bridge CCP after the transfer.

The resolution authority may appoint one or more special managers to replace the board of a CCP under resolution. The special manager shall be of sufficiently good repute and shall have adequate expertise in financial services, risk management and clearing services in accordance with the second subparagraph of Article 27(2) of OTC.

The special manager shall have all the powers of the shareholders and the board of the CCP. The special manager shall only exercise those powers under the control of the resolution authority. The resolution authority may limit the actions of the special manager or require prior consent for certain acts.
The resolution authority shall make public the appointment referred to in paragraph 1 and the terms and conditions attached to that appointment.

The special manager shall be appointed for no more than one year. The resolution authority may renew that period where necessary to achieve the resolution objectives.

The special manager shall take all the measures necessary to promote the resolution objectives and implement resolution actions taken by the resolution authority. In the event of inconsistency or conflict, that statutory duty shall override any other duty of management in accordance with the statutes of the CCP or national law.

The special manager shall draw up reports for the appointing resolution authority at regular intervals set by the resolution authority and at the beginning and the end of the mandate. Those reports shall describe in detail the financial situation of the CCP and state the reasons for the measures taken.

The resolution authority may remove the special manager at any time. It shall in any case remove the special manager in the following cases:

where the special manager is failing to perform its duties in accordance with the terms and conditions set out by the resolution authority;

where the objectives of resolution would be better achieved by removing or replacing that special manager; or

where the conditions for the appointment are no longer fulfilled.

The resolution authority may require a CCP under resolution, any entity belonging to the same group as the CCP or any of the CCP’s clearing members to provide any services or facilities that are necessary to enable a purchaser or bridge CCP to operate effectively the business transferred to it.
The first subparagraph shall apply regardless of whether an entity in the same group as the CCP or one of the CCP’s clearing members has entered into normal insolvency proceedings or is itself under resolution.

The resolution authority may enforce obligations imposed, pursuant to paragraph 1, by resolution authorities in other Member States where those powers are exercised in relation to entities belonging to the same group as the CCP under resolution, or in relation to the clearing members of that CCP.

The services and facilities referred to in paragraph 1 shall not include any form of financial support.

The services and facilities provided pursuant to paragraph 1 shall be provided:

on the same commercial terms on which they were provided to the CCP immediately before the resolution action was taken, where an agreement for the purposes of providing those services and facilities exists; or

on reasonable commercial terms, where there is no agreement for the purposes of providing those services and facilities or where that agreement has expired.

Where instruments of ownership, assets, rights, obligations or liabilities of a CCP under resolution are located in, or governed by the law of a Member State other than the Member State of the resolution authority, any transfer or resolution action in respect of those instruments, assets, rights, obligations or liabilities shall have effect in accordance with the law of that other Member State.

The resolution authority of a Member State shall be provided with all necessary assistance by the authorities of other relevant Member States to ensure that any instruments of ownership, assets, rights, obligations or liabilities are transferred to the purchaser or bridge CCP or any other resolution action becomes effective in accordance with the applicable national law.

Shareholders, creditors and third parties that are affected by the transfer of instruments of ownership, assets, rights, obligations or liabilities referred to in paragraph 1 shall not be entitled to prevent, challenge, or set aside that transfer under the law of the Member State where the assets are located or that governs the transfer of the instruments of ownership, assets, rights, obligations or liabilities.

Where the resolution authority of a Member State applies the resolution tools referred to in Articles 28 to 32, and the contracts, liabilities, instruments of ownership or debt instruments of the CCP under resolution include instruments, contracts or liabilities that are governed by the law of another Member State, or liabilities owed to creditors and contracts in respect of clearing members and, where applicable, their clients located in that other Member State, the relevant authorities in that other Member State shall ensure that any action resulting from those resolution tools takes effect.
For the purposes of the first subparagraph, shareholders, creditors and clearing members and, where applicable, their clients affected by those resolution tools shall be entitled to challenge the reduction of the principal or payable amount of the instrument or liability or its conversion or restructuring, as the case may be, only under the law of the Member State of the resolution authority.

The following rights and safeguards shall be determined in accordance with the law of the Member State of the resolution authority:

the right for shareholders, creditors and third parties to appeal pursuant to Article 74 against the transfer of instruments of ownership, assets, rights, obligations or liabilities referred to in paragraph 1 of this Article;

the right for affected creditors to appeal pursuant to Article 74 against the reduction of the principal or payable amount or the conversion or restructuring of an instrument, liability or contract covered by paragraph 4 of this Article; and

the safeguards for partial transfers, as referred to in Chapter V, in relation to assets, rights, obligations or liabilities referred to in paragraph 1.

Where a resolution action concerns assets or contracts of persons located in a third country or instruments of ownership, rights, obligations or liabilities governed by the law of a third country, the resolution authority may require that:

the CCP under resolution and the recipient of those assets, contracts, instruments of ownership, rights, obligations or liabilities take all necessary steps to ensure that the action becomes effective;

the CCP under resolution holds the instruments of ownership, assets or rights or discharges the liabilities or obligations on behalf of the recipient until the action becomes effective;

the reasonable expenses of the recipient properly incurred in carrying out any action required under points (a) and (b) of this paragraph are reimbursed in any of the ways referred to in Article 27(10).

For the purposes of paragraph 1 of this Article, the resolution authority shall require the CCP to ensure the inclusion of a provision in its contracts and other agreements with clearing members and holders of instruments of ownership and debt instruments located in or governed by the law of third countries by which they agree to be bound by any action in respect of their assets, contracts, rights, obligations and liabilities taken by the resolution authority, including the application of Articles 28, 32, 55, 56 and 57.
The resolution authority may require the CCP to ensure the inclusion of such a provision in its contracts and other agreements with holders of other liabilities located in or governed by the law of third countries. The resolution authority may require the CCP to provide it with a reasoned legal opinion by an independent legal expert confirming the legal enforceability and effectiveness of such provisions.

Where the resolution action referred to in paragraph 1 does not become effective, that action shall be void in relation to the instruments of ownership, assets, rights, obligations or liabilities concerned.

A crisis prevention measure or a resolution action taken in accordance with this Regulation, or any event directly linked to the application of that action, shall not be deemed to be insolvency proceedings, an enforcement event or an event of default within the meaning of SFIPSSSD, Directive 2002/47/EC and PRCIIFR respectively provided that the substantive obligations under the contract, including payment and delivery obligations, and the provision of collateral, continue to be performed.
For the purposes of the first subparagraph of this paragraph, third-country resolution proceedings recognised pursuant to Article 77, or otherwise where the resolution authority so decides, shall be considered a resolution action taken in accordance with this Regulation.

A crisis prevention measure or a resolution action referred to in paragraph 1 shall not be used to:

exercise any termination, suspension, modification, netting or set-off rights, including in relation to a contract entered into by any entity of the group to which the CCP belongs which includes cross-default provisions or obligations which are guaranteed or otherwise supported by any group entity;

obtain possession, exercise control or enforce any security over any property of the CCP concerned or any group entity in relation to a contract which includes cross-default provisions; or

affect any contractual rights of the CCP concerned or any group entity in relation to a contract which includes cross-default provisions.

The resolution authority may suspend any payment or delivery obligations of both counterparties to any contract entered into by a CCP under resolution from the publication of the notice of suspension in accordance with Article 72 until the end of the working day which follows that publication.
For the purposes of the first subparagraph, the end of the working day shall mean midnight in the Member State of the resolution authority.

Where a payment or delivery obligation would have been due during the suspension period, the payment or delivery obligation shall be due immediately upon expiry of the suspension period.

The resolution authority shall not exercise the power referred to in paragraph 1 to payment and delivery obligations owed to systems or operators of systems designated for the purposes of SFIPSSSD, other CCPs, and central banks.

The resolution authority may prevent secured creditors of a CCP under resolution from enforcing security interests in relation to any assets of that CCP under resolution from the publication of the notice of the restriction in accordance with Article 72 until the end of the working day which follows that publication.
For the purposes of the first subparagraph, the end of the working day shall mean midnight in the Member State of the resolution authority.

The resolution authority shall not exercise the power referred to in paragraph 1 in relation to any security interest of systems or operators of systems designated for the purposes of SFIPSSSD, other CCPs, and central banks over assets pledged or provided by way of margin or collateral by the CCP under resolution.

The resolution authority may suspend the termination rights of any party to a contract with a CCP under resolution from the publication of the notice of the termination in accordance with Article 72 until the end of the working day which follows that publication, provided that the payment and delivery obligations and the provision of collateral continue to be performed.
For the purposes of the first subparagraph, the end of the working day shall mean midnight in the Member State of the resolution.

The resolution authority shall not exercise the power referred to in paragraph 1 in relation to systems or operators of systems designated for the purposes of SFIPSSSD, other CCPs and central banks.

A party to a contract may exercise a termination right under that contract before the end of the period referred to in paragraph 1 where that party receives notice from the resolution authority that the rights and liabilities covered by the contract shall not be:

transferred to another entity; or

subject to write-down, conversion, or the application of a resolution tool to allocate losses or positions.

Where the notice referred to in paragraph 3 of this Article has not been given, termination rights may be exercised on the expiry of the period of suspension, subject to Article 54, as follows:

where the rights and liabilities covered by the contract have been transferred to another entity, a counterparty may exercise termination rights in accordance with the terms of that contract only if the recipient entity causes the enforcement event to occur or continue;

where the rights and liabilities covered by the contract remain with the CCP, a counterparty may exercise termination rights in accordance with the conditions for termination as set out in the contract between the CCP and the relevant counterparty only if the enforcement event occurs or continues after the expiry of a suspension under paragraph 1 of this Article.

The resolution authority may exercise control over the CCP under resolution to:

manage the activities and services of the CCP, exercising the powers of its shareholders and board;

consult the risk committee;

manage and dispose of the assets and property of the CCP under resolution.

The control referred to in the first subparagraph of this paragraph may be exercised directly by the resolution authority or indirectly by a special manager appointed by the resolution authority in accordance with Article 50(1).

Where the resolution authority exercises control over the CCP, the resolution authority shall not be deemed to be a shadow director or de facto director under national law.

Without prejudice to Article 74, resolution authorities shall take resolution actions through executive orders in accordance with national administrative competences and procedures.

Where the resolution authority applies one or more resolution tools, it shall ensure that shareholders, clearing members and other creditors do not incur greater losses than they would have incurred had the resolution authority not taken resolution action in relation to the CCP at the time the resolution authority considered that the conditions for resolution pursuant to Article 22(1) were met and had the CCP instead been wound up under normal insolvency proceedings, following the full application of the applicable contractual obligations and other arrangements in its operating rules.

For the purposes of assessing compliance with the ‘no creditor worse off’ principle as laid down in Article 60, the resolution authority shall ensure that a valuation is carried out by an independent person as soon as possible after the resolution action or actions have been effected.

The valuation referred to in paragraph 1 shall include:

the treatment that shareholders, clearing members and other creditors would have received had the resolution authority not taken resolution action in relation to the CCP at the time the resolution authority considered that the conditions for resolution pursuant to Article 22(1) were met and had the CCP instead been wound up under normal insolvency proceedings, following the full application of the applicable contractual obligations and other arrangements in its operating rules;

the actual treatment that shareholders, clearing members and other creditors, have received in the resolution of the CCP;

whether there is any difference between the treatment referred to in point (a) of this paragraph and the treatment referred to in point (b) of this paragraph.

For the purposes of calculating the treatments referred to in point (a) of paragraph 2, the valuation referred to in paragraph 1 shall:

disregard any provision of extraordinary public financial support to the CCP under resolution or central bank emergency liquidity assistance or any central bank liquidity assistance provided under non-standard collateralisation, tenor and interest terms;

be based on the losses that would have been realistically incurred by clearing members and other creditors, had the CCP been wound up under normal insolvency proceedings, following the full application of the applicable contractual obligations and other arrangements in its operating rules;

take into account a commercially reasonable estimate of the direct replacement costs, including any additional margin requirements, incurred by the clearing members to reopen within an appropriate period their comparable net positions in the market by considering effective market conditions, including market depth and ability of the market to transact the relevant volume of such net positions within that period; and

be based on the CCP’s own pricing methodology unless such methodology for price determination does not reflect the effective market conditions.

The length of the period referred to in point (c) of the first subparagraph shall reflect the implications of the applicable insolvency law and the characteristics of the relevant net positions.

The valuation referred to in paragraph 1 of this Article shall be distinct from the valuation carried out under Article 24(3).

ESMA, taking into account the regulatory technical standards adopted pursuant to Articles 49(5) and 74(4) of Directive 2014/59, shall develop draft regulatory technical standards specifying the methodology for carrying out the valuation referred to in paragraph 1 of this Article including the calculation of the losses following liquidation resulting from the costs referred to in point (c) of the first subparagraph of paragraph 3 of this Article had the CCP been wound up under normal insolvency proceedings, following the full application of the applicable contractual obligations and other arrangements in its operating rules.
ESMA shall submit those draft regulatory standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 49(5) 14 74(4) es' class='internal-link article' href='#art_10' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Assessment of recovery plans' data-bs-placement='top' >10 to 14 of ESAESMAR.

Where, in accordance with the valuation carried out under Article 61, any shareholder, clearing member or other creditor has incurred greater losses than it would have incurred had the resolution authority not taken resolution action in relation to the CCP and had the CCP instead been wound up under normal insolvency proceedings, following the full application of the applicable contractual obligations or other arrangements in its operating rules, that shareholder, clearing member or other creditor shall be entitled to the payment of the difference.

Contractual arrangements allowing clearing members to pass on to their clients the negative consequences of the resolution tools shall also include, on an equivalent and proportionate basis, the right of clients to any recompense or compensation clearing members receive in accordance with Article 27(6) or any cash equivalent of such recompense or compensation or any proceeds they receive following a claim made in accordance with Article 62 to the extent that such proceeds are related to client positions. Those provisions shall also apply to the contractual arrangements by clients and indirect clients offering indirect clearing services to their clients.

ESMA shall develop draft regulatory technical standards in order to specify, in a transparent manner, to the extent allowed by confidentiality of contractual arrangements, the conditions under which the passing on of compensation, cash equivalent of such compensation or any proceeds referred to in the paragraph 1 is required, and the conditions under which it is to be considered proportionate.
ESMA shall submit those draft regulatory technical standards to the Commission by 12 February 2022.
The Commission is empowered to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of ESAESMAR.

The resolution authority shall recover, to the largest extent possible, any reasonable expenses incurred in connection with a payment as referred to in Article 62 in any of the following ways:

from the CCP under resolution, as a preferred creditor;

from any consideration paid by the purchaser where the sale of business tool has been applied;

from any proceeds generated as a result of the termination of the bridge CCP, as a preferred creditor.

The protections provided for in Articles 66, 67 and 68 shall apply in the following circumstances:

where the resolution authority transfers some but not all of the assets, rights, obligations or liabilities of a CCP under resolution to another entity or, in the application of a resolution tool, from a bridge CCP to a purchaser; and

where the resolution authority exercises the powers referred to in point (g) of Article 49(1).

The resolution authority shall ensure that the application of a resolution tool, other than the position allocation tool referred to in Article 29, does not result in transferring some but not all of the rights and liabilities under a title transfer financial collateral arrangement, a set-off arrangement or a netting arrangement between a CCP under resolution and other parties to the arrangements, or in modifying or terminating the rights and liabilities under those arrangements through the use of ancillary powers.

The resolution authority shall ensure that the application of a resolution tool does not result in any of the following with respect to security arrangements between a CCP under resolution and other parties to those arrangements:

the transfer of assets against which the liability is secured unless that liability and benefit of the security are also transferred;

the transfer of a secured liability unless the benefit of the security is also transferred;

the transfer of the benefit of the security unless the secured liability is also transferred;

the modification or termination of a security arrangement through the use of ancillary powers, if the effect of that modification or termination is that the liability ceases to be secured.

The resolution authority shall ensure that the application of a resolution tool does not result in any of the following with respect to structured finance arrangements, including covered bonds:

the transfer of some, but not all, of the assets, rights and liabilities which constitute or form part of a structured finance arrangement to which the CCP under resolution is a party;

the termination or modification through the use of ancillary powers of the assets, rights and liabilities which constitute or form part of a structured finance arrangement to which the CCP under resolution is a party.

For the purposes of the first subparagraph, structured finance arrangements shall include securitisations and instruments used for hedging purposes which form an integral part of the cover pool and which according to national law are secured in a way similar to the covered bonds, which involve the granting and holding of security by a party to the arrangement or a trustee, agent or nominee.

The resolution authority shall ensure that the application of a resolution tool does not affect the operation of systems and rules of systems covered by SFIPSSSD, where the resolution authority:

transfers some but not all of the assets, rights, obligations or liabilities of a CCP under resolution to another entity;

cancels or amends the terms of a contract to which the CCP under resolution is a party or substitutes a purchaser or bridge CCP as a party.

For the purposes of paragraph 1 of this Article, the resolution authority shall ensure that the application of a resolution tools does not result in any of the following outcomes:

revoking a transfer order in accordance with Article 5 of SFIPSSSD;

affecting the enforceability of transfer orders and netting as required by Articles 3 and 5 of SFIPSSSD;

affecting the use of funds, securities or credit facilities as required by Article 4 of SFIPSSSD;

affecting the protection of collateral security as required by Article 9 of SFIPSSSD.

The CCP shall notify the competent authority where it considers that it is failing or likely to fail as referred to in Article 22(2).

The competent authority shall inform the resolution authority of any notifications received under paragraph 1, and of any recovery or other measures in accordance with Title IV that the competent authority requires the CCP to take.
The competent authority shall inform the resolution authority of any emergency situation referred to in Article 24 of OTC relating to a CCP and of any notification received in accordance with Article 48 of that Regulation.

Where a competent authority or resolution authority determines that the conditions referred to in points (a) and (b) of Article 22(1) or in Article 22(3) are met in relation to a CCP, it shall notify without undue delay the following bodies:

the competent authority or resolution authority for that CCP;

the competent authority for the parent undertaking of the CCP;

the central bank;

the competent ministry;

the ESRB and the designated national macro-prudential authority; and

the supervisory college and resolution college for that CCP.

After a notification from the competent authority pursuant to Article 70(3), the resolution authority shall determine whether any resolution action is needed.

The decision whether or not to take resolution action in relation to a CCP shall contain information on the following:

the resolution authority’s assessment of whether the CCP meets the conditions for resolution; and

any action that the resolution authority intends to take, including the decision to apply for winding up, the appointment of an administrator or any other measure under applicable normal insolvency proceedings.

The resolution authority shall notify the resolution college of the resolution actions it intends to take. That notification shall also indicate whether the resolution actions deviate from the resolution plan.
As soon as practicable after taking a resolution action, the resolution authority shall notify all of the following:

the CCP under resolution;

the resolution college;

the designated national macroprudential authority and the ESRB;

the Commission, ECB, and EIOPA; and

the operators of the systems covered by SFIPSSSD in which the CCP under resolution participates.

The notification referred to in the second subparagraph of paragraph 1 shall include a copy of any order or instrument by which the relevant action is taken and indicate the date from which the resolution action is effective.
The notification to the resolution college pursuant to second subparagraph of paragraph 1 shall provide the reasons for any deviation from the resolution plan.

A copy of the order or instrument by which the resolution action is taken, or a notice summarising the effects of the resolution action and, if applicable, the terms and period of suspension or restriction referred to in Articles 55, 56 and 57 of this Regulation, shall be published on all of the following:

the website of the resolution authority;

the website of the competent authority, if different from the resolution authority, and the website of ESMA;

the website of the CCP under resolution; and

where the instruments of ownership or debt instruments of the CCP under resolution are admitted to trading on a regulated market, the means used for the disclosure of regulated information concerning the CCP under resolution in accordance with Article 21(1) of Directive 2004/109 of the European Parliament and of the Council ( 26 ) .

Where the instruments of ownership or debt instruments are not admitted to trading on a regulated market, the resolution authority shall ensure that the documents providing proof of the order referred to in paragraph 3 are sent to the holders of the instruments of ownership and creditors of the CCP under resolution that are known through the registers or databases of the CCP under resolution which are available to the resolution authority.

The requirements of professional secrecy shall be binding in respect of the following persons:

resolution authorities;

competent authorities, ESMA and EBA;

competent ministries;

special managers or temporary administrators appointed under this Regulation;

potential acquirers that are contacted by the competent authorities or solicited by the resolution authorities, irrespective of whether that contact or solicitation was made as preparation for the application of the sale of business tool, and irrespective of whether the solicitation resulted in an acquisition;

auditors, accountants, legal and professional advisors, valuers and other experts directly or indirectly engaged by the resolution authorities, competent authorities, competent ministries or by the potential acquirers referred to in point (e);

central banks and other authorities involved in the resolution process;

a bridge CCP;

the senior management and members of the board of the CCP, and employees of the bodies or entities referred to in points (a) to (k) before, during and after their appointment;

all other members of the resolution college not referred to in points (a), (b), (c) and (g); and

any other persons who provide or have provided services directly or indirectly, permanently or occasionally, to persons referred to in points (a) to (j).

With a view to ensuring that the confidentiality requirements laid down in paragraphs 1 and 3 are complied with, the persons referred to in points (a), (b), (c), (g), (h) and (j) of paragraph 1 shall ensure that there are internal rules in place, including rules to secure secrecy of information between persons directly involved in the resolution process.

The persons referred to in paragraph 1 shall be prohibited from disclosing confidential information received during the course of their professional activities or from a competent authority or resolution authority in connection with their functions under this Regulation, to any person or authority unless it is in the exercise of their functions under this Regulation, or in summary or aggregate form such that individual CCPs cannot be identified, or with the express and prior consent of the authority or the CCP which provided the information.
Before disclosing any type of information, the persons referred to in paragraph 1 shall assess the effects that the disclosure may have on the public interest as regards financial, monetary or economic policy, on the commercial interests of natural and legal persons, on the purpose of inspections, on investigations and on audits.
The procedure for checking the effects of disclosing information shall include a specific assessment of the effects of any disclosure of the contents and details of recovery and resolution plans as referred to in Articles 9 and 12 'articles' class='internal-link article' href='#art_10' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Assessment of recovery plans' data-bs-placement='top' >10and 1 15 articles' class='internal-link article' href='#art_9' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Recovery plans' data-bs-placement='top' >9 and 12 and the result of any assessment carried out under Articles 9 0 and 12 'articles' class='internal-link article' href='#art_10' data-bs-toggle='popover' data-bs-trigger='hover focus' data-bs-content='Assessment of recovery plans' data-bs-placement='top' >10 and 15.
Any person or entity referred to in paragraph 1 shall be subject to civil liability in the event of an infringement of this Article, in accordance with national law.

By way of derogation from paragraph 3, the persons referred to in paragraph 1 may exchange confidential information with any of the following provided that the recipient is subject to requirements of confidentiality for the purposes of that exchange:

any other person where necessary for the purposes of planning or carrying out a resolution action;

parliamentary enquiry committees in their Member State, courts of auditors in their Member State and other entities in charge of enquiries in their Member State;

national authorities responsible for overseeing payment systems, authorities responsible for normal insolvency proceedings, authorities entrusted with the public duty of supervising other financial sector entities, authorities responsible for the supervision of financial markets and insurance undertakings and inspectors acting on their behalf, authorities responsible for maintaining the stability of the financial system in Member States through the use of macroprudential rules, authorities responsible for protecting the stability of the financial system, and persons responsible for carrying out statutory audits.

This Article shall not prevent:

employees and experts of the bodies or entities referred to in points (a) to (g), and in point (j), of paragraph 1 from sharing information among themselves within each body or entity;

resolution authorities and competent authorities, including their employees and experts, from sharing information with each other and with other Union resolution authorities, other Union competent authorities, competent ministries, central banks, authorities responsible for normal insolvency proceedings, authorities responsible for maintaining the stability of the financial system in Member States through the use of macroprudential rules, persons charged with carrying out statutory audits of accounts, EBA, ESMA, or, subject to Article 80, third-country authorities that carry out equivalent functions to resolution authorities, or, subject to strict confidentiality requirements, to a potential acquirer for the purposes of planning or carrying out a resolution action.

This Article shall be without prejudice to national law concerning the disclosure of information for the purpose of legal proceedings in criminal or civil cases.

A decision to take a crisis prevention measure or resolution action may be subject to ex-ante judicial approval where provided in national law, where the procedure relating to that approval and the court’s consideration are expeditious. ex-ante

All persons affected by a decision to take a crisis prevention measure or a decision to exercise any power, other than a resolution action, shall have the right of appeal against that decision.

All persons affected by a decision to take a resolution action shall have the right of appeal against that decision.

The right of appeal referred to in paragraph 3 shall be subject to the following conditions:

the lodging of an appeal shall not entail any automatic suspension of the effects of the challenged decision;

the decision of the resolution authority shall be immediately enforceable and it shall give rise to a rebuttable presumption that a suspension of its enforcement would be against the public interest; and

the procedure relating to the appeal shall be expeditious.

The court shall use the economic assessments of the facts carried out by the resolution authority as a basis for its own assessment.

Where necessary to protect the interests of third parties acting in good faith who have acquired instruments of ownership, assets, rights, obligations or liabilities of a CCP under resolution by virtue of a resolution action, the annulment of a decision of a resolution authority shall not affect any subsequent administrative acts or transactions concluded by the resolution authority concerned which were based on the annulled decision.
For the purposes of the first subparagraph, the remedies available to the applicant where a decision of the resolution authority is annulled shall be limited to compensation for the loss suffered as a result of that decision.

Normal insolvency proceedings shall not be commenced in relation to a CCP except at the initiative of the resolution authority or with its consent in accordance with paragraph 3.

Competent authorities and resolution authorities shall be notified without delay of any application for the opening of normal insolvency proceedings in relation to a CCP, irrespective of whether the CCP is under resolution or a decision has been made public in accordance with Article 72(3).

The authorities responsible for normal insolvency proceedings shall only commence those proceedings after the resolution authority has notified them of its decision not to take any resolution action in relation to the CCP or where no notification has been received within seven days of the notification referred to in paragraph 2.
Where necessary for the effective application of the resolution tools and powers, resolution authorities may request the court to apply a stay on any judicial action or proceeding in which a CCP under resolution is or may become a party for an appropriate period in accordance with the resolution objectives.

In accordance with Article 218 TFEU, the Commission may submit to the Council recommendations for the negotiation of agreements with one or more third countries regarding the means of cooperation between the resolution authorities and the relevant third-country authorities in connection with recovery and resolution planning in relation to CCPs and third-country CCPs, with regard to the following situations:

where a third-country CCP provides services or has subsidiaries in one or more Member States;

where a CCP established in a Member State provides services or has one or more subsidiaries in a third country.

The agreements referred to in paragraph 1 of this Article shall, in particular, seek to ensure the establishment of processes and arrangements for cooperation in carrying out the tasks and exercising the powers referred to in Article 79, including the exchange of information necessary for those purposes.

This Article shall apply in respect of third-country resolution proceedings unless and until an international agreement as referred to in TFEU, the Commission may submit to the Council recommendations for the negotiation of agreements with one or more third countries regarding the means of cooperation between the resolution authorities and the relevant third-country authorities in connection with recovery and resolution planning in relation to CCPs and third-country CCPs, with regard to the following situations:' data-bs-placement='top'>Article 76(1) enters into force with the relevant third country. It shall also apply following the entry into force of an international agreement as referred to in TFEU, the Commission may submit to the Council recommendations for the negotiation of agreements with one or more third countries regarding the means of cooperation between the resolution authorities and the relevant third-country authorities in connection with recovery and resolution planning in relation to CCPs and third-country CCPs, with regard to the following situations:' data-bs-placement='top'>Article 76(1) with the relevant third country to the extent that recognition and enforcement of third-country resolution proceedings is not governed by that agreement.

Relevant national authorities shall recognise third-country resolution proceedings relating to a third-country CCP in any of the following cases:

the third-country CCP provides services, or has subsidiaries established, in one or more Member States;

the third-country CCP has assets, rights, obligations or liabilities located in one or more Member States or are governed by the law of those Member States.

Relevant national authorities shall ensure the enforcement of the recognised third-country resolution proceedings in accordance with their national law.

The relevant national authorities shall at least have the power to do the following:

exercise the resolution powers in relation to the following:

assets of a third-country CCP that are located in their Member State or governed by the law of their Member State; and

rights or liabilities of a third-country CCP that are booked in their Member State or governed by the law of their Member State, or where claims in relation to such rights and liabilities are enforceable in their Member State;

perfect, including to require another person to take action to perfect, a transfer of instruments of ownership in a subsidiary established in the designating Member State;

exercise the powers in Article 55, 56 and 57 in relation to the rights of any party to a contract with an entity referred to in paragraph 2 of this Article, where such powers are necessary in order to enforce third-country resolution proceedings; and

render unenforceable any right to terminate, liquidate or accelerate contracts, or affect the contractual rights, of entities referred to in paragraph 2 and other group entities, where such a right arises from resolution action taken in respect of the third-country CCP, whether by the third-country resolution authority itself or otherwise pursuant to legal or regulatory requirements as to resolution arrangements in that country, provided that the substantive obligations under the contract, including payment and delivery obligations, and provision of collateral, continue to be performed.

The recognition and enforcement of third-country resolution proceedings shall be without prejudice to any normal insolvency proceedings applicable under national law.

By way of derogation from Article 77(2), the relevant national authorities may refuse to recognise or to enforce third-country resolution proceedings in any of the following cases:

the third-country resolution proceedings would have adverse effects on financial stability in their Member State;

creditors, clearing members and, where applicable, their clients located in their Member State would not receive the same treatment as third-country creditors, clearing members and, where applicable, their clients with similar legal rights under the third-country home resolution proceedings;

recognition or enforcement of the third-country resolution proceedings would have material fiscal implications for their Member State;

the recognition or enforcement would be contrary to national law.

This Article shall apply in respect of cooperation with a third country unless and until an international agreement as referred to in TFEU, the Commission may submit to the Council recommendations for the negotiation of agreements with one or more third countries regarding the means of cooperation between the resolution authorities and the relevant third-country authorities in connection with recovery and resolution planning in relation to CCPs and third-country CCPs, with regard to the following situations:' data-bs-placement='top'>Article 76(1) enters into force with the relevant third country. It shall also apply following the entry into force of an international agreement provided for in TFEU, the Commission may submit to the Council recommendations for the negotiation of agreements with one or more third countries regarding the means of cooperation between the resolution authorities and the relevant third-country authorities in connection with recovery and resolution planning in relation to CCPs and third-country CCPs, with regard to the following situations:' data-bs-placement='top'>Article 76(1) with the relevant third country to the extent that the subject matter of this Article is not governed by that agreement.

Competent authorities or resolution authorities, where appropriate, shall conclude cooperation arrangements with the following relevant third-country authorities, taking into account existing cooperation arrangements established pursuant to Article 25(7) of OTC:

where a third-country CCP provides services or has subsidiaries in one or more Member States, the relevant third-country authorities where the CCP is established;

where a CCP provides services in or has one or more third-country subsidiaries, the relevant third-country authorities where those services are provided or where the subsidiaries are established.

The cooperation arrangements referred to in paragraph 2 of this Article shall establish processes and arrangements between the participating authorities for sharing the necessary information for, and cooperating in, carrying out the following tasks and exercising the following powers in relation to CCPs referred to in points (a) and (b) of that paragraph or groups including such CCPs:

the drawing up of resolution plans in accordance with Article 12 and similar requirements under the law of the relevant third countries;

the assessment of the resolvability of such institutions and groups, in accordance with Article 15 and similar requirements under the law of the relevant third countries;

the application of powers to address or remove impediments to resolvability pursuant to Article 16 and any similar powers under the law of the relevant third countries;

the application of early intervention measures pursuant to Article 18 and similar powers under the law of the relevant third countries; and

the application of resolution tools and exercise of resolution powers and similar powers conferred upon the relevant third-country authorities.

Cooperation arrangements concluded between resolution authorities and competent authorities of Member States and third countries pursuant to paragraph 2 may include provisions on the following matters:

the exchange of information necessary for the preparation and maintenance of resolution plans;

consultation and cooperation in drawing up resolution plans, including principles for the exercise of powers under Article 77 and similar powers under the law of the relevant third countries;

the exchange of information necessary for the application of resolution tools and exercise of resolution powers and similar powers under the law of the relevant third countries;

early warning to or consultation of parties to the cooperation arrangement before taking any significant action under this Regulation or relevant third-country law affecting the CCP or group to which the arrangement relates;

the coordination of public communication in the case of joint resolution actions;

procedures and arrangements for the exchange of information and cooperation under points (a) to (e) of this paragraph, including, where appropriate, through the establishment and operation of crisis management groups.

In order to ensure the common, uniform and consistent application of paragraph 3, ESMA shall issue guidelines on the types and content of the provisions referred to in this paragraph by 12 August 2022.

Resolution authorities and competent authorities shall notify ESMA of any cooperation agreements that they have concluded in accordance with this Article.

Resolution authorities, competent authorities, competent ministries and, where applicable, other relevant national authorities shall exchange confidential information, including recovery plans, with relevant third-country authorities only if the following conditions are met: