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Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

Preamble

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 and in particular Article 197(8) thereof,

Whereas:

  1. (1)

    Regulation (EU) No 575/2013 states that equities or convertible bonds included in a main index may be used by institutions as eligible collateral. One of the eligibility criteria for collateral is that it should be sufficiently liquid. To be considered as main indices for the purposes of that Regulation, equity indices should therefore mainly consist of equities that can reasonably be expected to be realisable when an institution needs to liquidate them. This should be the case when at least 90 % of the components of an index have a free float of at least EUR 500000000 or, in the absence of information about free float, a market capitalisation of at least EUR 1000000000.

  2. (2)

    It should also be possible for institutions to recognise as eligible collateral instruments that are liquid relative to the markets in which they are operating and meet a minimum level of liquidity, irrespective of whether a market is established in the Union or in a third country. Therefore, an equity index should be considered as a main index where it includes no more than half of the total number of companies whose shares are traded on the market on which the index is based, where the average daily turnover is at least EUR 100000, and where it also meets two of the following three criteria: the total market capitalisation of the index is at least 40 % of the market capitalisation of all the companies whose shares are traded on that market; the total turnover of trading in the components of the index is at least 40 % of the total turnover of all equity trading on that market; and the index serves as an underlying for derivatives products.

  3. (3)

    Convertible bond indices should be considered as main indices only where the constituent bonds can be converted into equities where at least 90 % of those equities have a free float of at least EUR 500000000 or, in the absence of information about free float, a market capitalisation of at least EUR 1000000000.

  4. (4)

    Where two indices meet the criteria to be considered a main index and one is a subset of the other, for simplicity only the broader one should be included in the list of main indices.

  5. (5)

    Regulation (EU) No 575/2013 states that debt securities issued by certain institutions, not having a credit assessment by an external credit assessment institution (ECAI) may be used as eligible collateral where they fulfil a number of conditions, one of them being that they are listed on a recognised exchange.

  6. (6)

    In order to be considered a recognised exchange for the purposes of Regulation (EU) No 575/2013, an exchange is required to meet the conditions laid down in Article 4(1)(72) of that Regulation. Regarding one of those conditions, namely that the exchange should have a clearing mechanism, all regulated markets trading financial instruments not listed in Annex II to Regulation (EU) No 575/2013 should satisfy this second condition by virtue of being licensed as a regulated market under Directive 2004/39/EC of the European Parliament and of the Council and by virtue of the existence of rules and procedures for the clearing and settlement of transactions in place as required under that Directive 2004/39/EC.

  7. (7)

    Where an exchange's clearing mechanism is provided by a central counterparty (CCP), that CCP should comply with the requirements laid down in Regulation (EU) No 648/2012 of the European Parliament and of the Council. For the rare derivatives exchanges not served by CCPs, the margining rules laid down in Regulation (EU) No 648/2012 should be used as the benchmark for assessing whether the margining requirements imposed by those exchanges are appropriate.

  8. (8)

    This Regulation is based on the draft implementing technical standards submitted by the European Securities and Markets Authority (ESMA) to the Commission.

  9. (9)

    On 17 December 2015, the Commission notified ESMA of its intention to endorse the draft implementing technical standard with amendments to take account of the fact that some equity indices that meet the eligibility criteria to be considered as main indices were not included in the list provided in that draft standard. In its formal opinion of 28 January 2016, ESMA confirmed its initial position and did not resubmit an implementing technical standard amended in a way consistent with the Commission's proposed amendments. The draft implementing technical standard should therefore be endorsed with the amendments necessary to avoid the exclusion of indices that meet the eligibility criteria to be considered as main indices for the purposes of Regulation (EU) No 575/2013.

  10. (10)

    ESMA has conducted an open public consultation on the draft implementing technical standards on which this Regulation is based and has requested the opinion of the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council. ESMA has not analysed in detail the potential costs and benefits related to the draft implementing technical standards as this would have been disproportionate in relation to their scope and impact,

HAS ADOPTED THIS REGULATION:

Article 1 Main indices

The main indices for the purposes of Article 197(8)(a) of Regulation (EU) No 575/2013 are specified in Annex I to this Regulation.

Article 2 Recognised exchanges

The recognised exchanges for the purposes of Article 197(8)(b) of Regulation (EU) No 575/2013 are specified in Annex II to this Regulation.

Article 3 Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Signature

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 13 September 2016.

For the Commission

The President

Jean-Claude JUNCKER

ANNEX I MAIN INDICES SPECIFIED UNDER ARTICLE 197 OF REGULATION (EU) No 575/2013

Table 1 Equity indices

Index

Country/Area

STOXX Asia/Pacific 600

Asia/Pacific

ASX100

Australia

ATX Prime

Austria

BEL20

Belgium

IBOVESPA

Brazil

TSX60

Canada

CETOP20 Index

Central Europe

Hang Seng Mainland 100 Index (China)

China

NYSE ARCA China Index

China

Shanghai Shenzhen CSI 300

China

PX Prague

Czech Republic

OMX Copenhagen 20

Denmark

FTSE RAFI Emerging Markets

Emerging Markets

MSCI Emerging Markets 50

Emerging Markets

FTSE Europe Index

Europe

STOXX Europe 600

Europe

MSCI AC Europe & Middle East

Europe and Middle East

OMXH25

Finland

SBF120

France

S&P BMI France

France

HDAX

Germany

FTSE All World Index

Global

MSCI ACWI

Global

FT ASE Large Cap

Greece

Hang Seng

Hong Kong

Hang Seng Composite Index

Hong Kong

CNX 100 Index

India

S&P BSE 100 Index

India

ISEQ 20

Ireland

FTSE MIB

Italy

Nikkei 300

Japan

TOPIX mid 400

Japan

S&P Latin America 40

Latin America

FTSE Bursa Malaysia KLCI Index

Malaysia

Mexico Bolsa Index

Mexico

AEX

Netherlands

S&P NZX 15 Index

New Zealand

OBX

Norway

WIG20

Poland

PSI 20

Portugal

MSCI Russia Index

Russia

Russian Traded Index

Russia

FTSE Straits Times Index

Singapore

FTSE JSE Top 40

South Africa

INDI 25 Index

South Africa

KOSPI 100

South Korea

IBEX35

Spain

OMXS60

Sweden

OMXSB

Sweden

SMI Expanded Index

Switzerland

TSEC Taiwan 50

Taiwan

FTSE Nasdaq Dubai UAE 20 Index

UAE

FTSE 350

UK

NASDAQ100

USA

Russell 3000 Index

USA

S&P 500

USA

Table 2 Convertible bond indices

Exane ECI-Europe

Europe

Jefferies JACI Global

Global

Thomson Reuters Global Convertible

Global

ANNEX II RECOGNISED EXCHANGES SPECIFIED UNDER ARTICLE 197 OF REGULATION (EU) No 575/2013

Table 1 Recognised exchanges on which contracts listed in Annex II of Regulation (EU) No 575/2013 are not traded

Regulated market

MIC

EURONEXT LONDON

XLDN

LONDON STOCK EXCHANGE — REGULATED MARKET

XLON

Table 2 Recognised exchanges on which contracts listed in Annex II of Regulation (EU) No 575/2013 are traded

Regulated market

MIC

ICE FUTURES EUROPE — ENERGY PRODUCTS DIVISION

IFEU

ICE FUTURES EUROPE — FINANCIAL PRODUCTS DIVISION

IFLL

ICE FUTURES EUROPE — EQUITY PRODUCTS DIVISION

IFLO

ICE FUTURES EUROPE — AGRICULTURAL PRODUCTS DIVISION

IFLX

THE LONDON METAL EXCHANGE

XLME

LONDON STOCK EXCHANGE DERIVATIVES MARKET

XLOD