We are seeking clarification on how exposures to Central counterparties are to be classified for large exposures reporting. We are unclear whether these counterparties are to be reported as unregulated financial entities and reported in LE4 or other and therefore only reported in LE1 and LE2. We have exposure to the London Clearing House which is a recognised clearing house, supervised by the Bank of England.

Large exposures reporting requirements require top 20 exposures to clients and top 10 exposures to institutions and top 10 exposures to unregulated financial entities to be reported. Depending on the classification of exposures to central counterparties we are not clear on whether these would count towards the top 20 exposures to clients or the top 10 exposures to unregulated financial entities. If the central counterparty is to be classified as an unregulated financial entity reporting template LE4 would also need to be completed.

In addition, Q&A 211 states that this condition can also be met where, in a Member State, financial institutions (to which the CRR is not applicable) are subject to prudential and supervisory requirements equivalent to those applied to institutions in terms of robustness, in accordance with Article 119(5) CRR.

In the same way, if a CCP is considered by the relevant competent authority to be subject to Regulation (EU) 648/2012 on European Market Infrastructures (EMIR), it cannot be considered unregulated in the terms of the first paragraph, since the EMIR is an EU-equivalent of the CRR for the entities to which it applies.

Finally, regarding the question of whether CCPs can be considered financial institutions, the latter are defined in Article 4(1)(26) CRR, and also in this vein paragraph 2(93)(c) of the European System of Accounts ESA 2010 states that specialised financial corporations or financial intermediaries “cover also Central Counterparty Clearing Houses (CCPs) carrying out inter-MFI repurchase agreement transactions.”

Regarding the issue of how to report the largest 20 exposures to clients and the largest exposures to Institutions and Unregulated financial entities see Q&A 1256.