LCH Limited – s. 144
Headnote
Application under section 144 of the Securities Act (Ontario) (Act) to vary the Order recognising LCH Limited as a clearing agency under section 21.2 of the Act.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5, AS AMENDED (THE ACT) AND IN THE MATTER OF LCH LIMITED
VARIATION ORDER (Section 144 of the Act)
WHEREAS on September 10, 2013, the Ontario Securities Commission (Commission) issued an order pursuant to section 21.2 of the Act recognizing LCH.Clearnet Limited as a clearing agency ("Recognition Order");
AND WHEREAS on September 28, 2018, the Commission issued an order varying the Recognition Order by replacing any reference to "LCH.Clearnet Limited" with "LCH Limited";
AND WHEREAS representation #6 and term and condition #1 of Schedule "B" of the Recognition Order refer to LCH Limited's authorisation as a central counter-party ("CCP") and regulatory oversight under the European Union ("EU") framework (the European Market Infrastructure Regulation or "EMIR");
AND WHEREAS on January 1, 2021, LCH Limited will no longer be an authorised CCP located in the EU. LCH Limited will become a third country CCP in the EU under EMIR as a result of the United Kingdom's withdrawal from the EU;
AND WHEREAS LCH Limited will continue to be subject to the UK regulatory regime (which incorporates EMIR via the European Union (Withdrawal) Act 2018 ("EUWA") and be recognised as a Clearing House (RCH), supervised by the Bank of England under the UK Financial Services and Markets Act 2000;
AND WHEREAS no other changes have been made, nor have any implications resulted from this change in respect of LCH Limited's business structure, governance, operations nor clearing services available to Ontario clearing members.
AND WHEREAS the Commission has received an Application from LCH Limited pursuant to section 144 of the Act to vary the Recognition Order to update representation number #6 and to vary term and condition #1 of Schedule "B" of the Recognition Order by removing the reference to LCH Limited's authorisation as a CCP and regulatory oversight under EMIR as a result of the withdrawal of the UK from the EU. ("Application");
AND WHEREAS based on the Application and the representations LCH Limited has made to the Commission, in the Commission's opinion it would not be prejudicial to the public interest to issue an order varying the Recognition Order;
IT IS ORDERED by the Commission that, pursuant to section 144 of the Act, the Recognition Order is varied as follows:
1. Representation #6 in the Recognition Order related to EMIR is deleted and replaced with the following representation:
6. The regulatory regime for CCPs in the European Union ("EU") is under the European Market Infrastructure Regulation ("EMIR"). On January 9, 2020, the UK Parliament passed the EU Withdrawal Agreement Bill, which resulted in the UK leaving the EU on January 31, 2020 subject to an 11 month transition period. LCH will continue to be subject to EMIR after the transition period via the UK implementation of EMIR which is incorporated into UK domestic law. In September 2020 the European Securities and Market Authority ("ESMA") announced the recognition of LCH as a Tier 2 CCP under the EU Framework. As a result, as of January 1, 2021, LCH will be recognised as a Third- Country CCP under EMIR.
2. Term and Condition #1 in Schedule "B" of the Recognition Order is varied as follows:
1. LCH shall maintain its status as a RCH with the Bank of England
and as a CCP authorised under EMIRand shall continue to be subject to the regulatory oversight of the Bank of Englandand under EMIR.
DATED this 17th day of December 2020 and effective on January 1, 2021.
"Frances Kordyback"
Ontario Securities Commission
"Cecilia Williams"
Ontario Securities Commission