Commission Delegated Regulation (EU) 2023/1193 of 14 March 2023 supplementing Regulation (EU) 2021/23 of the European Parliament and of the Council with regard to regulatory technical standards specifying the contents of the resolution plan (Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (1), and in particular Article 12(9), fourth subparagraph, thereof,

Whereas:

(1) When drawing up resolution plans, resolution authorities should make sure to consider all the elements referred to Article 12(7), points (a) to (s) of Regulation (EU) 2021/23. The standards for the content of resolution plans should be sufficiently detailed to ensure that resolution plans are targeted and useful for the implementation of resolution strategies, while also allowing for sufficient flexibility to take into account the national legal framework in the area of insolvency law, as well as the nature and complexity of the CCP’s clearing business.

(2) While all elements specifying the content of the resolution plans, which are regulated in Article 12 of Regulation (EU) 2021/23, should be included in the resolution plan, the resolution authority should ensure that these elements are reflected in the resolution plan in a suitable way considering the specific characteristics of the central counterparty (CCP), such as the nature and complexity of the clearing business performed by it.

(3) The summary of the key elements of the resolution plan referred to in Article 12(7), point (a), of Regulation (EU) 2021/23 should be succinct and focused but at the same time containing sufficient explanations to cover the key elements of the plan that are to be disclosed to the CCP. The summary should make the CCPs aware of key actions that they should be able to perform and data they should be able to submit. The summary should focus on where that plan may have a material impact on the CCP’s recovery and crisis management planning, and clarify any expectations from the CCP as regards cooperation in the resolution phase and the measures that may affect the CCP’s functions.

(4) In order to ensure the overall suitability and proportionality of the resolution plan, it should contain resolution scenarios and resolution strategies. The resolution authority should have the tools, in the form of different types of possible scenarios, including combinations thereof, to create relevant and suitable scenarios for the CCP, and a list of key aspects to be considered when establishing resolution strategies for the resolution scenarios.

(5) In order to take into consideration the specific characteristics of the applicable national legal framework in the area of insolvency law, resolution authorities should have the flexibility to consider some aspects of resolution planning carefully, such as the mechanism under Article 60 of Regulation (EU) 2021/23, and any differences between the creditors ranking under the national insolvency procedures and the loss absorption order established under that Regulation. This overall flexibility is evidenced by this Regulation, which provides the elements to be reflected in the resolution plan, without prejudice to the required flexibility under Regulation (EU) 2021/23. The elements specified in this Regulation also do not preclude the resolution authority from determining other aspects to be reflected in the resolution plan.

(6) To facilitate and ensure the effective implementation of the resolution plan, it is essential that, where the resolution authority has assessed certain aspects of the CCP differently from in the CCPs’ own assessment under the recovery plan, such differences are considered in light of a possible impact on the swift implementation of the resolution plan. Therefore, where any differences are identified, the resolution authority should consider them in the resolution plan and assess them to understand their effect, if any, on the implementation of the resolution plan.

(7) To ensure that resolution plans, where necessary, can be effectively implemented in due time, it is essential that the resolution authorities have ‘proof tested’ the application of the intended resolution plan, to the extent possible, by testing processes and procedures in detail. Such testing should include sending emails and information to ensure that any pre-planned actions related to how and when to undertake certain steps and how and when to collect certain information are workable in stressed conditions and that any impediments found are corrected to ensure, to the extent possible, that the estimated time frames are likely to be respected.

(8) To ensure that key employees remain at the CCP during the resolution phase, the resolution authority should try to assess and pre-empt incentive structures to be used, possibly not only linked to the CCPs future gains, but also direct remunerations and should consider how to ensure sufficient staff by considering short-term hires, exchanges, temporary allocations or consultancy arrangements of employees, where relevant, so that CCPs have the competence they need.

(9) To ensure a swift and efficient cooperation with the authorities whose areas of competence would be affected by the failure of a CCP, and which are represented in the resolution college as defined under Article 4 of Regulation (EU) 2021/23, the resolution authority should prepare and regularly test the arrangements for notifying the resolution college and communicating any relevant information.

(10) This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority (ESMA) after consulting the European Systemic Risk Board.

(11) ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits, and requested the advice of the Securities and Markets Stakeholder Group established by Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (2),

HAS ADOPTED THIS REGULATION:

Article 1

Quantification assessment

The resolution authority shall assess how the different aspects of the resolution plan are or may be quantified when drawing up the resolution plan and shall provide explanations as to how and to what extent a quantitative assessment has been undertaken for a certain aspect of the resolution plan. Where the resolution authority reaches the conclusion that, in relation to a specific aspect of the resolution plan, a quantitative assessment is either not appropriate or not possible, that should be stated in the resolution plan.

Article 2

Summary of key elements of the resolution plan

When preparing a summary of the key elements of the resolution plan in accordance with Article 12(7), point (a), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a) the key elements of the resolution strategies established and the underlying main scenarios under the resolution plan, distinguishing between default events, non-default events and a combination of the two;

Article 3

Summary of material changes

When preparing a summary of material changes to the resolution plan in accordance with Article 12(7), point (b), of Regulation (EU) 2021/23, the resolution authority shall ensure that the resolution plan includes material changes concerning at least the following elements:

(a) the markets where the CCP operates, the business lines considered core to the CCP, and the clearing services offered by the CCP;

(b) the interoperability arrangements of the CCP or the interdependencies of the CCP, including the service providers of the CCP;

(c) the capital and capital structure of the CCP, including the amounts of pre-funded dedicated own resources;

(d) the prudential requirements of the CCP, including changes in the default fund methodologies, margin and liquidity risk management frameworks, investment policies, collateral policies and settlement;

(e) the non-prudential requirements of the CCP, including organisational aspects such as organisational structure, business continuity and outsourcing, and material changes to the CCP’s conduct of business rules, including the composition of the CCP’s membership and changes regarding segregation and portability;

(f) the structure of the CCP’s ownership and managers’ incentive structures;

(g) the resolution scenarios and resolution strategies.

Article 4

Critical functions

When preparing a description of how the critical functions of the CCP could be legally and economically separated in accordance with Article 12(7), point (c), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a) a description of the functions regarded as critical by the resolution authority;

(b) where material differences compared to the recovery plan’s list of critical functions exist, a detailed description of the main reasons why the resolution authority has assessed the critical functions differently, the material effects of such different assessment and how this could affect the resolvability of the CCP;

(c) a description of the main dependencies between critical functions and critical interdependencies and of the key internal and external arrangements and processes, including operations, IT procedures, a list of key staff and main service providers that are necessary for the CCP to continue providing its critical functions, or any other aspects that may be necessary to consider in view of a possible transfer of some or all of the operations of the CCP to another financial market infrastructure or bridge CCP, where that is part of the proposed resolution strategy;

(e) a summary of how the CCP’s proposed approach to separating, or not, the CCP’s critical functions from its other functions may affect the resolvability assessment for the CCP;

(f) a mapping of critical functions to identified legal entities and to the CCP’s core business lines.

Article 5

Time frame for implementation

(a) a list of actions that the resolution authority would envisage taking and, where relevant, whether these actions derive from the application of the recovery plan;

(b) a list of the envisaged steps, with allocated time frames, to be taken by the resolution authority for implementing each material aspect of the resolution plan and specifying corresponding steps for such implementation, including an estimated timetable to assess each of the resolution strategies and its applicability;

(c) a description of how replenishing of the CCP’s financial resources is envisaged under the resolution plan, including where derived from the recovery plan, and the estimated time frame for different measures to replenish the CCP’s financial resources.

(a) suitable and relevant, as shown by a description of how the resolution authority has assessed the feasibility and credibility of the envisaged steps and allocated time frames in the resolution plan;

(b) tested regularly, and at least upon the establishment of the resolution plan, and thereafter following any material changes;

(c) effective, by taking into account the processes and procedures, including the application of templates.

Article 6

Assessment of resolvability

When preparing a detailed description of the assessment of resolvability to be included in the resolution plan in accordance with Article 12(7), point (e), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a) the conclusions of the assessment of resolvability, including at least whether or not the CCP is deemed resolvable based on the resolution authority’s considerations under Article 15(2) of Regulation (EU) 2021/23;

(b) a description of how the resolution authority has assessed the extent to which the CCP is resolvable without assuming any of the financing arrangements as set out in Article 15(1), points (a), (b) and (c), of Regulation (EU) 2021/23;

(c) a description of the rationale of the resolution authority for considering the feasibility of applying the resolution tools in such a way that meets the resolution objectives;

(d) a description of the resolution authority’s assessments of the information received from the CCP under Article 15(3) of Regulation (EU) 2021/23, detailing whether the resolution authority agrees with the CCP’s assessment as to the absence of impediments;

(e) a description providing details of when and how the resolvability has been assessed most recently by the resolution authority;

(f) a description of the availability of the envisaged assets and rights to the CCP and if such assets would be available for use in resolution or whether such use or transfer of such assets could be hampered or prevented by residual interests of direct and indirect participants in those assets or by legal constraints, such as the legal mechanism by which collateral is provided, including whether collateral is provided as a security interest, pledge or by way of title transfer;

(g) a description of each of the matters that the resolution authority is to consider when assessing the resolvability of a CCP, as set out in Section C of the Annex to Regulation (EU) 2021/23.

Article 7

Impediments to resolvability

When preparing a description of any measures required pursuant to Article 16 of Regulation (EU) 2021/23 to address or remove impediments to resolvability to be included in the resolution plan in accordance with Article 12(7), point (f), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a) where a material impediment has been identified, a descriptive summary of the measures required under Article 16 of Regulation (EU) 2021/23, to identify any necessary changes to the structure, operations or risk management frameworks and financial resources of the CCP, or any measures to improve the CCP’s resolvability, and the timeline for completing the requested changes;

(b) a description of any impediments addressed or removed in accordance with Article 16 of Regulation (EU) 2021/23 over a period of 2 years preceding the current review of the impediments under Article 15 of that Regulation.

Article 8

Determining the value of and marketability of critical functions and assets

When preparing a description of the processes for determining the value and marketability of the critical functions and assets to be included in the resolution plan in accordance with Article 12(7), point (g), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a) a description of the method for determining the value and marketability of the critical functions and assets such as the core business lines, operations and assets of the CCP mainly focusing on aspects that could have an impact on the valuation such as volatility in the market, inaccessibility and/or uncertainty of the market prices, time constraints and legal issues;

(b) if the method described in point (a) materially deviates from the valuation methodology applied under the recovery plan, a description of the main reasons for which the resolution authority has assessed the valuation methodology differently and the material effects of such a difference, if any.

Article 9

Information requirements

When preparing a description of the information requirements set out in Article 12(7), point (h), of Regulation (EU) 2021/23, the resolution authority shall ensure that at least the following elements are included in the resolution plan:

(a) a description of the arrangements between the resolution authority and the CCP ensuring access to and sharing of information and how the CCP will maintain the information systems and controls that can promptly produce and make available relevant data and information to the resolution authority; such arrangements including procedures to date the information and providing standardised updates where there are material changes;

(b) a list of the information required pursuant to Article 13 of Regulation (EU) 2021/23 and a description of how the CCP has envisaged ensuring that such information is kept up to date and available at all times to the resolution authority.

Article 10

How resolution actions could be financed

When preparing an explanation regarding the financing of resolution actions in accordance with Article 12(7), point (i), of Regulation (EU) 2021/23, the resolution authority shall ensure that the resolution plan includes at least the following elements:

(a) a description of the financial resources envisaged as being needed under the resolution plan, clearly separating solvency from liquidity funding needs, including overall descriptions regarding the possible financial resources that are likely to be required in relation to the implementation of the resolution strategy including each relevant resolution scenario;

(b) where not all contractual obligations and other arrangements have been enforced before the CCP entered into resolution, a pre-assessment of the possible issues with pursuing such obligations and arrangements in relation to resources for financing resolution actions, and of whether such identified issues may negatively affect the possibility of achieving the resolution objectives in a timely manner;

(c) a description of potential sources of resolution funding, including the main terms of financing, material preconditions for their use, the timing of their availability, and any collateral requirements to the extent they are available ex ante;

(d) a description and analysis of how and when the CCP may apply for the use of central bank facilities, complying with the requirement that resolution plans should not assume any access to central bank facilities on non-standard terms;

(e) a description and identification of assets that could be used and whether they are expected to qualify as collateral, and how such an expectation of use of the assets may create encumbrances, primarily in the value and use of such assets.

Article 11

Resolution strategies and scenarios