The Bank of England and the Commodity Futures Trading Commission announce joint statement on the supervision of cross-border central counterparties

The Bank of England (BoE) has published a press statement to inform that the Bank itself and the U.S. Commodity Futures Trading Commission (CFTC) – each responsible for the supervision of central counterparties (CCPs) – have committed to further strengthen „their commitment to close cooperation and mutual understandings on the supervision“ of CCPs operating cross-border. This commitment follows the signing of a corresponding Memorandum of Understanding (MoU) in 2020 which entails the exchange of information on such CCPs and the close cooperation on any issues resulting from the operation of cross-border CCPs.
According to the BoE, „duly authorized officials“ have now made all necessary arrangements under the MoU to ensure an adequate level of communication and cooperation, including the notification of material events (e.g. those relating to the financial resilience of a CCP or to potential threats to business continuity) and the exchange of other relevant information relating to the supervision of cross-border CCPs.
Additionally, the Bank of England has officially recognized the cooperation arrangement with the CFTC to meet the Bank’s expectations of a so-called „Level 1 Informed Reliance Assessment“ which means that the BoE can rely upon the U.S. supervisory framework for CCPs to be adequate and robust; the U.S. supervisory framework is thus deemed to be equivalent to the one of the U.K. As as consequence, U.S. CCPs seeking to offer clearing services in UK will be categorized as Tier 1 CCPs in UK whose key supervisor will be the home authority responsible for supervision – the CFTC.