[ESMA91-372-2193 ] Final Report on the Draft Regulatory Technical Standards on Business Reorganisation Plans

The European Securities and Markets Authority (ESMA) has released a final report containing draft regulatory technical standards (RTS) for business reorganisation plans of central counterparties (CCPs) in accordance with Articles 37(4) and 38(4) of the European Union’s Central Counterparty Recovery and Resolution Regulation (CCPRRR). The RTS specify the minimum elements that should be included in a business reorganisation plan and the criteria that the plan is required to fulfill for approval by the resolution authority.
The objective of the resolution framework is to ensure that CCPs maintain continuity of critical functions and core business lines in the event of a failure while avoiding significant adverse effects on financial stability, the real economy, and taxpayers. Articles 36 to 39 of the CCPRRR specify the aspects to consider regarding business reorganisation plans.
CCPRRR requires that a CCP conducts a review of the causes of its failure and submits a review and a business reorganisation plan to the resolution authority within one month after the authority applied the write-down and conversion tool in accordance with Article 32 of CCPRRR. The resolution authority may extend this period up to two months. Within one month of the submission of the business reorganisation plan by the CCP to the resolution authority pursuant to Article 36(1) of the CCPRRR, 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. If they are satisfied, the resolution authority approves the plan; otherwise, the CCP is required to resubmit an amended plan.
The plan must set out measures aiming to restore the long-term viability of the CCP or parts of its business within a reasonable timeframe, and be based on realistic assumptions as to the economic and financial market conditions under which the CCP will operate.