Are exchanges, explicitly exchanges according to Article 4(1)(72) of Regulation (EU) No 575/2013 (CRR), also treated like institutions?
Article 107 (3) CRR foresees an equal treatment for a couple of counterparties in line with the treatment of institutions. For financial entities like investment firms, credit institutions and clearing houses this is explicitly related to third countries. However it is unclear whether the link to third countries is also intended for exchanges. The wording of Article of 107 (3) CRR may be red as being limited to third country exchanges. This would put recognised exchanges within European Union into a less favourable treatment than third country exchanges. We do not believe such a treatment is indented and ask for clarification. An equal treatment for recognised exchanges in the European Union would be necessary in continuity of Article 40 of Directive 2006/49/EC.
Exposures to a recognised exchange, as defined in point 72 of Article 4(1) of Regulation (EU) No 575/2013 (CRR) are not automatically treated as exposures to institutions. For an exposure to a recognised exchange to be treated as an exposure to an institution certain conditions need to be met:
a) in case of a recognised exchange established in the EU, the conditions in Article 119(5) of the CRR;
b) in case of a recognised exchange established in a third country, the conditions in Articles 107(3) and 119(5) of the CRR.
If the above conditions are not met, then the exposure to the recognised exchange must be treated as an exposure to a corporate.
This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Internal Market and Services) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.
Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).