Cleary Gottlieb is representing Brazilian clearinghouse B3 – Brasil, Bolsa, Balcão (formerly BM&F Bovespa) in the process for the determination of Brazil as an “equivalent jurisdiction” by the European Commission and its recognition as a “third country central counterparty” by the European Securities and Markets Authority (ESMA) under the European Market Infrastructure Regulation (EMIR).
On December 15, 2016, Brazil was determined by the European Commission to be an equivalent jurisdiction for purposes of the regulation and supervision of central counterparties (CCPs).
On March 20, 2017, ESMA announced that it had entered memoranda of understanding with the Brazilian banking and securities regulators (Banco Central do Brasil and Comissao de Valores Mobiliarios) relating to cooperation and exchange of information, as well as the monitoring by ESMA of ongoing compliance by CCPs established in Brazil with the conditions for recognition.
On March 30, 2017, B3 – Brasil, Bolsa, Balcão was recognized as a third country CCP by ESMA.
The CCP equivalence process under EMIR is designed to allow CCPs established in non-EEA countries to provide clearing services to clearing members and trading venues established in the EEA. Third country CCPs recognized by ESMA under EMIR also automatically qualify as qualifying central counterparties under the EU Capital Requirements Regulation (CRR), which enables their clearing members and clients to benefit from favorable capital treatment under the CRR for their exposures to the CCP.