On September 26 the EBA published its final draft regulatory technical standards (RTS) which specify the capital requirements for central counterparties (CCPs) under the EMIR Regulation.

The draft RTS provide that a CCP should hold capital, including retained earnings and reserves, that is at all times at least able to cover:

• o    overall operational and legal risks;
• o    otherwise uncovered credit, counterparty credit and market risks; and
• o    business risk (based on a CCP’s own estimate and subject to the approval of the body that regulates the CCP).

A CCP should also hold an additional amount of capital that is able to cover the CCP’s gross operational expenses during an appropriate time span for winding down or restructuring its activities.

The draft RTS will now be sent to the European Commission who have until December 31 to decide whether to endorse them. The RTS, once endorsed, will be directly applicable across the European Union.