The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has withdrawn as required by EMIR the recognition decision of JSE Clear, a central counterparty (“CCP”) established in South Africa.
This withdrawal follows the addition of South Africa, by the European Commission, to the list of high-risk third countries presenting strategic deficiencies in their national anti-money laundering and counter financing of terrorism (“AML/CFT”) regime, on 16 July 2023.
In order to minimise potential market disruption, ESMA has provided for an adaptation period of three months. The withdrawal of recognition decision will therefore enter into effect on 29 December 2023. From that date, the CCP concerned will no longer be permitted to provide clearing services to clearing members or trading venues established in the EU.
ESMA has also updated its list of recognised third-country central counterparties (TC CCPs).
Background
In order for a third-country CCP (“TC-CCP”) to be recognised by ESMA, all cumulative conditions set out under Article 25(2) of EMIR must be met. Where any of those conditions is no longer met, ESMA must withdraw the recognition decision of that TC-CCP.
One of such conditions is that the TC-CCP is established or authorised in a third country that is not included in AML blacklist under AML Directive. This above-mentioned recognition condition, while outside the scope of action of the CCP concerned, is no longer fulfilled in respect of the CCP established in the South Africa.
Source – ESMA