Wednesday 12, April 2017 by Georgina Enzer

Dubai Commodities Clearing Corporation (DCCC) recognised by ESMA as a Third-Country CCP

The Dubai Commodities Clearing Corporation (DCCC), a leading Central Counter Party (CCP) in the region and a wholly owned subsidiary of the Dubai Gold & Commodities Exchange (DGCX), has been recognised as a third-country CCP (TC-CCP) by the European Securities and Markets Authority (ESMA).

This recognition was granted to the DCCC on 30 March 2017 under the European Market Infrastructure Regulation (EMIR), adopted in July 2012. Under EMIR requirements, TC-CCPs need to be recognised by ESMA in order to operate in the European Union. This decision will open access to all European banks to clear DGCX trades without incurring any additional capital requirement as imposed by EU Regulations on their exposure to DCCC.

“The TC-CCP recognition from the European Securities and Markets Authority marks a major milestone in the history of DCCC’s operations. This truly demonstrates the continued efforts of the DCCC, DGCX and the United Arab Emirates to improve the quality of regulatory oversight and align it with international standards. We are excited about the DCCC now being able to work with European Clearing Institutions, and the many opportunities it will present for clearing businesses in the UAE and wider region. We are immensely grateful for the unflinching support received from the SCA throughout the TC-CCP process,” said Gaurang Desai, CEO of DGCX.

DCCC is one of the largest and most diversified CCP operators in the Middle East and has handled DGCX’s clearing without a single default since inception. DCCC is the only CCP in the Middle-East that offers clearing services across multiple asset classes: FX, Precious Metals, Energy and Equity Derivatives. DCCC offers Clearing Members the option of settlement in multiple currencies along with accepting a wide range of collaterals against margins. Following the third-country CCP recognition from ESMA, DCCC will now be able to provide clearing services to European financial institutions.

“Emirates NBD congratulates DCCC on this significant achievement, which will lay the foundation for expanding its commodities clearing services business across the European Union. As the only UAE National partner Clearing Bank associated with DCCC, Emirates NBD is proud to be a part of this achievement and is committed to supporting DCCC in its future ventures,” said Aazar Ali Khwaja, Senior Executive Vice President, Head of Global Markets and Treasury at Emirates NBD.

DCCC collaborated with the UAE’s National Competitive Authority (NCA) – the Securities and Commodities Authority (SCA) during the recognition process and implemented a number of critical improvements to the regulatory oversight and corporate governance standards.

As a third-country CCP, DCCC is now considered as a Qualifying Central Counterparty (QCCP) as per European banking regulations. The banking regulations imposed significantly higher capital charges on European banks with exposure to non-QCCPs. European clearing participants will now have lesser capital requirements for trades cleared and settled through DCCC.

“SCA is proud that the DCCC has achieved the ESMA/EMIR equivalence. This is of great value to not only SCA, but also to all of our stakeholders and bodes well for the UAE’s leading position as a regional hub for central clearing,” said HE Dr. Obaid Saif Al-Zaabi, Acting Chief Executive Officer of the SCA.

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