(1)

Article 63 of Regulation (EU) 2021/23 states that contractual arrangements allowing clearing members to pass on to their clients the negative consequences of the resolution tools shall also include, on an equivalent and proportionate basis, the right of clients to any recompense or compensation clearing members receive in accordance with Article 27(6) of Regulation (EU) 2021/23 or any cash equivalent of such recompense or compensation or any proceeds they have received following a claim made in accordance with Article 62 of Regulation (EU) 2021/23 (‘reimbursement’), to the extent that such proceeds are related to client positions and their contributions, and that those provisions shall also apply to the contractual arrangements by clients and indirect clients providing indirect clearing services to their clients.

(2)

To ensure an equivalent and proportionate distribution of the reimbursement, clearing service providers should distribute, in a fair and non-discriminatory manner, the different forms of reimbursement to the clearing service users concerned. The part of the reimbursement received by each clearing service user concerned should be proportionate to the contribution made by such clearing service user to the resolution of the CCP, to which it had indirect access through the clearing service provider concerned and where such contribution results in a payment under Article 27(6) or Article 62 of Regulation (EU) 2021/23 (‘qualifying contribution’). For the same reason, clearing service users should receive their reimbursement without any set-off, unless a clearing service user owes an obligation that is due and payable to a clearing service provider that is at the same time under the obligation to pass on reimbursement to that clearing service user. However, in order to prevent such set-off or netting from resulting in an undue reduction of the amounts owed to the clearing service users further down the clearing chain, where the recipient is also a clearing service provider, the reimbursement to be passed on to its clearing service users should be calculated based on the reimbursement received by the clearing service provider before any deductions or set-off were made.

(3)

Reimbursements should be allocated in a fair and non-discriminatory manner to all clearing service users that have made a qualifying contribution and to the own accounts of the clearing service provider where such clearing service provider have also made a qualifying contribution. To further avoid discrimination or unfair treatments, clearing service providers should not apply any subordination clauses, nor any ranking when distributing such reimbursements.

(4)

Market conditions during a resolution phase are likely to be very stressed. It is therefore necessary to provide clearing service users with transparency and to reassure them that the financial assets and instruments intended for the distribution of the reimbursement are protected in the event of a default of their clearing service provider. Clearing service providers should therefore, when receiving reimbursement on behalf of a clearing service user, hold such reimbursement on a separate and segregated account.

(5)

The range of financial assets or financial instruments that may be used to compensate clearing members, clients and indirect clients is very wide and different assets and instruments bear different risks. To ensure the fair and equal distribution of the reimbursement, clearing service providers should divide the different types of financial assets and financial instruments that they have received as a reimbursement equally between each of the clearing service users and their own accounts. Such division should be proportional to the qualifying contribution made by those clearing service users to the resolution of the CCP to which they have indirect access through those clearing service providers, or by clearing service providers in that resolution procedure.

(6)

It is necessary to account for the operational specificities and obstacles associated with some types of financial assets and financial instruments. It is also necessary to ensure to the maximum extent that the clearing service user receives a fair reimbursement where the clearing service user is not able to receive a certain type of financial asset or financial instrument or would prefer not to receive a certain type of financial asset or financial instrument for other reasons. The clearing service provider should therefore, upon the request of the clearing service user and to the extent possible, transfer the asset or instrument concerned to another recipient appointed by the clearing service user. Where that is not possible, the clearing service provider should, sell the relevant assets or instruments in the market to a third party at the prevailing market price and subsequently transfer the proceeds of the sale to the clearing service user.

(7)

To ensure transparency and traceability, clearing service providers should inform their clearing service users, to the best of their possibilities, about any decision taken in the resolution process to compensate for qualifying contributions made. Such information should provide, to the extent possible, the scope of the decision to contribute to the resolution under Regulation (EU) 2021/23, the composition of the reimbursement and the calculation of the reimbursement including how the clearing service provider has calculated the clearing service user’s reimbursement. For the same reason and to ensure that clearing service users understand the relationship between the contribution they have made and the reimbursement they have received, clearing service providers should inform clearing service users, where possible and without breaching any confidentiality restrictions, of the overall distribution and composition of the reimbursement.

(8)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority (ESMA).

(9)

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 in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (2),

1.

‘clearing service provider’ means a clearing member as defined in Article 2, point (14) of Regulation (EU) No 648/2012 of the European Parliament and of the Council (3), a client as defined in Article 2, point (15), of Regulation (EU) No 648/2012, an indirect client, a second indirect client or a third indirect client as defined in Article 1, point (b),(d) or (e) of Commission Delegated Regulation (EU) 2017/2154 (4), that provides clearing services, directly or indirectly, in the Union;

2.

‘clearing service user’ means a client as defined in Article 2, point (15), of Regulation (EU) No 648/2012, or an indirect client, a second indirect client or a third indirect client as defined in Article 1, point (b),(d) or (e) of Delegated Regulation (EU) 2017/2154, that uses clearing services provided by a clearing service provider;

3.

‘reimbursement’ means the recompense or compensation clearing members receive in accordance with Article 27(6) of Regulation (EU) 2021/23, including instruments of ownership, debt instruments or instruments recognising a claim on the CCP’s future profits, or any cash equivalent of such recompense or compensation or any proceeds they receive following a claim made in accordance with Article 62 of Regulation (EU) 2021/23 including where any of these amounts, referred to under those articles, are passed on to a clearing service user;

4.

‘qualifying contribution’ means the contribution, made via a clearing member of the CCP, under the conditions set out in Article 63 of Regulation (EU) 2021/23, by a clearing service user to the CCP in resolution to which it has indirect access through a clearing service provider and where the contribution made, via the clearing member of the CCP, in the resolution procedure, has resulted in a reimbursement.