The internal and external centralisation of Capital Markets Union regulatory structures: the case of Central Counterparties

This chapter provides a legal and political analysis of the EU regulatory framework for central counterparties (CCPs) as established by the recent reform of the European Market Infrastructure Regulation (EMIR 2019). In our legal analysis we show how EMIR 2019 establishes a differentiated regulatory framework for CCPs based in the EU (intra-EU CCPs) and for those providing services in the EU market but established in a third-country (extra-EU CCPs). The two-pronged framework on the one hand strengthens ESMA’s supervisory powers and centralises the regulatory structure over extra-EU CCPs and on the other hand allows for decentralisation where national competent authorities retain supervisory powers over intra-EU CCPs. This differentiated regulatory outcome is then explained by looking at the interplay between two political factors: the ‘neo-mercantilist’ competition between Member States to attract financial outflows from London after Brexit; and the bureaucratic competition between different EU agencies to strengthen their supervisory powers.