BoE and CFTC reinforce mutual supervision of cross-border CCPs
14 April 2023 US, UK
Image: AdobeStock/JHVEPhoto
The Bank of England and the Commodity Futures Trading Commission (CFTC) have reinforced their cooperation and mutual understanding relating to the oversight of cross-border central counterparties (CCPs).
This builds on a memorandum of understanding (MoU) signed between the two parties in 2020, where the two regulatory authorities declared a 鈥渃ommon understanding of mutual practices鈥� concerning supervision of US and UK cross-border CCPs.
Through this arrangement, they will share information on supervisory issues and offer mutual assistance on specific matters of concern when they arise, including notification of material events, and assistance on matters relating to financial resilience or business continuity of a CCP.
With Brexit, the BoE is responsible for supervising non-UK CCPs that provide clearing services in the UK and will rank incoming CCPs on the basis of the systemic risk posed to the UK financial system.
In some cases, the BoE will determine that it can rely on CCP regulation and supervision from the home authority. In this case, the Bank will classify the CCP as Tier 1 and the BoE will defer to the home authority.
Based on the 2020 MoU, the BoE has affirmed that it will continue to rely on CFTC鈥檚 supervision and oversight in the case of US-based CCPs that are 鈥渋ncoming鈥� to the UK.
This builds on a memorandum of understanding (MoU) signed between the two parties in 2020, where the two regulatory authorities declared a 鈥渃ommon understanding of mutual practices鈥� concerning supervision of US and UK cross-border CCPs.
Through this arrangement, they will share information on supervisory issues and offer mutual assistance on specific matters of concern when they arise, including notification of material events, and assistance on matters relating to financial resilience or business continuity of a CCP.
With Brexit, the BoE is responsible for supervising non-UK CCPs that provide clearing services in the UK and will rank incoming CCPs on the basis of the systemic risk posed to the UK financial system.
In some cases, the BoE will determine that it can rely on CCP regulation and supervision from the home authority. In this case, the Bank will classify the CCP as Tier 1 and the BoE will defer to the home authority.
Based on the 2020 MoU, the BoE has affirmed that it will continue to rely on CFTC鈥檚 supervision and oversight in the case of US-based CCPs that are 鈥渋ncoming鈥� to the UK.
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