CCP related transactions

Article 400(1)(j) of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR) - which shall apply from 28 June 2021 - grants an exemption for clearing members´ trade exposures and default fund contributions to qualified central counterparties. In its previous wording, it refers to “trade exposures to central counterparties and default fund contributions to central counterparties” Article 400(1)(l) CRR exempts clients´ trade exposures with reference to Article 305(2) or (3) CRR. Article 400(1)(j) and (l) CRR use the definition of trade exposure as stated in Article 4(1)(91) CRR, applicable since 27 June 2019. According to this definition, the exposure of a clearing member or a CCP client has to arise from contracts and transactions listed in points (a), (b) and (c) of Article 301(1) CRR, as well as initial margin. Article 305 - both before and after the amendment introduced by Regulation (EU) 2019/876 - does not describe a form of trade exposure. It states the methods, which have to be used to calculate the own funds requirements. Therefore (bilateral) exposures of a clearing member to qualified central counterparties are exempted under Article 400(1)(j) CRR as long as they meet the criteria set out in Article 4(1)(91),  (i.e. contracts and transactions listed in points (a), (b) and (c) of Article 301(1), as well as initial margin) (Bilateral) exposures of a client are exempted under Article 400(1) (l) as long as they meet the criteria set out in Article 4(1) point 91 and the criteria set out in Article 305 (2) or (3) CRR. Other types of exposures are not exempted from the application of Article 395(1) CRR.