## EXECUTIVE SUMMARY (cr18227)

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### Regulatory and supervisory structure
- Adoption of EMIR in 2012 and the CSD Regulation in 2014, plus secondary legislation, have driven evolution in CCP and CSD regulation.
- Single Supervisory Mechanism (SSM) implemented in 2014, bringing CCPs and CSDs with a banking license under centralized banking supervision as less significant institutions.
- June 2017 proposals:
  - Commission: change EMIR to further centralize decision making at ESMA and strengthen supervision over third-country CCPs.
  - ECB: amend article 22 of the ESCB/ECB Statute to provide facilities to CCPs and make regulations for CCPs.
- Authorization and supervision:
  - CCPs authorized/supervised under EMIR (Regulation (EU) No 648/2012) — common rules, passport, clearing obligation for eligible OTC derivatives, rules for trade repositories.
  - (I)CSDs authorized/supervised under CSD Regulation (Regulation (EU) No 909/2014) — harmonize timing and conduct of securities settlement.
  - One or more National Competent Authorities (NCAs) designated per member state for authorization/supervision.
- Colleges and roles:
  - CCP colleges include NCAs, ESCB members (as overseer/CBI), ESMA, and other relevant authorities; provide NCA opinions on EMIR compliance.
  - No mandatory colleges for CSDs; CSD Regulation identifies relevant authorities (central banks overseeing CSDs, central banks issuing most relevant currencies, etc.).
  - ESMA: develops RTS, coordinates colleges, binding mediation powers, annual peer reviews, EU-wide CCP stress test coordinator, responsible for third-country recognition cooperation.
  - ESCB/Eurosystem: participates in colleges as overseer/CBI; involved in technical standards but ESMA retains final responsibility.
  - SSM: CCPs and CSDs with a banking license fall under SSM; categorized as less significant institutions (direct supervision by SSM-NCAs, oversight by ECB-SSM).
  - EBA and ESRB have roles for FMIs with banking licenses and systemic risk monitoring respectively.

### Systemic importance and concentration of risk
- Significant portion of OTC traded derivatives now clear through CCPs, concentrating risk in CCPs highly interconnected with euro area and global banks.
- ESMA stress testing indicates overall EU CCP resilience to multiple clearing member defaults and extreme market shocks.
- CPMI-IOSCO found EMIR and technical standards consistent or broadly consistent with a majority of PFMI principles; observed gaps include ex ante planning (e.g., recovery plans).

### Findings on appropriate institutional arrangements and centralization
- Centralize CCP supervision in ESMA recommended to:
  - Ensure consistent approach to cross-border risks.
  - Enhance level playing field among CCPs.
  - Require ESMA to have sufficient resources and qualified staff.
- Strengthen role of central banks of issue (CBIs) because:
  - CBIs are potential liquidity providers and need necessary information and comfort.
  - CBIs bring a financial stability perspective complementary to ESMA’s regulator perspective.
  - ECB regulations for CCPs should be consistent with EMIR and confined to ESCB mandate to avoid overlaps.
- Commission June 2017 proposal elements:
  - ESMA to receive direct supervisory powers while NCAs remain directly responsible.
  - CCP colleges chaired/managed by ESMA representative; ESMA to contribute three voting members to each college.
  - Commission proposes 49 additional ESMA full-time staff for CCP activities (ESMA currently employs 8 full-time staff for CCP activities).
- Mission assessment:
  - Centralization addresses cross-border externalities, timeliness of crisis responses, and divergent NCA interpretations.
  - ESMA is logical central supervisor candidate but needs sufficient competent resources; suggested recruitment from NCAs.
  - ECB stronger role desirable for financial stability; CBI consent for decisions on margins, liquidity risk controls, collateral, settlement and interoperability proposed.
  - Resource example: daily supervision of 1 CCP requires 1–4 full time staff (dependent on size, interconnectedness, substitutability and complexity).

### Central bank accounts and liquidity access
- Recommendation: develop harmonized ECB/Eurosystem policy for CCPs’ access to central bank accounts and liquidity provision.
- Benefits of access:
  - Deposit of cash collateral at central bank accounts reduces dependence on commercial banks and related operational/liquidity risks.
  - Access to central bank liquidity arrangements, under conditions, reduces dependence on commercial banks and repo markets, providing safety net in market strain.
- Policy design points:
  - Apply to all CCPs authorized under EMIR, without distinction between CCPs with and without a banking license.
  - Address third-country CCPs to ensure level playing field (e.g., direct Target2 accounts or other arrangements if requirements met).
  - ECB/Eurosystem should lead development of such policy.
- Current arrangements and inconsistencies:
  - CCPs may open TARGET2 accounts subject to TARGET2 Guideline conditions; NCBs and ECB may grant intraday credit.
  - CCPs with banking licenses (Eurex Clearing and LCH S.A.) can be counterparts under ECB standard framework (marginal lending facility, U.S. dollar swap facility).
  - Practices for cash deposits vary; CCPs with banking licenses typically receive different remuneration than CCPs without banking license, creating an unlevel playing field.
- Additional considerations:
  - Banking licenses for CCPs are legacy from pre-EMIR times; national approaches vary (France mandatory, Germany optional, Netherlands not possible).
  - 2018 Euro FSAP Technical Note on Systemic Liquidity recommends assessing CCPs’ potential to dis-intermediate banking system via ECB deposit facility and considers measures such as deposit facility remuneration limits.

### Third-country CCPs, Brexit, and cross-border cooperation
- Post-Brexit implications:
  - U.K. becomes a third-country for EMIR; unless equivalence granted, U.K.-based CCPs must apply for ESMA recognition to provide services to EU counterparties.
  - EU banks would not be permitted to maintain positions in U.K. CCPs not authorized/recognized under EU regulations, increasing required capital buffers and potentially preventing fulfillment of EMIR clearing obligations.
  - Interoperability arrangements between U.K. and EU CCPs may need halting until recognition, disturbing clearing arrangements.
- Transitional recommendations:
  - Recognize U.K. CCPs on day of Brexit if the U.K. regulatory regime is fully equivalent at exit.
  - Alternative: allow U.K. CCPs to continue providing clearing services during a transition period until Commission determines equivalence.
  - Reference: March 19, 2018 announcement on a 21-month Brexit transition period welcomed.
- Concentration of risk — LCH Ltd statistics and risks:
  - Clearing by EU members on LCH Ltd averages more than €500 billion per day.
  - Notional amount outstanding on LCH Ltd: €83 trillion for euro-denominated interest rate derivatives.
  - Notional amount outstanding at U.S. Chicago Mercantile Exchange: EUR 1.8 trillion for euro-denominated interest-rate derivatives.
  - LCH calculated EU banks are responsible for 14 percent of LCH Ltd interest rate derivatives’ volumes, of which 7 percent in euro-denominated interest swaps.
  - Failure of LCH Ltd could expose euro area banks to losses (cash calls after a member default) and non-default losses; margin pro-cyclicality risk noted.
- EU proposals for third-country CCPs (Commission):
  - ESMA to categorize third-country CCPs into tier 1 (non-systemic), tier 2 (systemically important for EU), and a subset of tier 2 of ‘specifically substantial systemic significance’.
  - Tier 2 CCPs: special conditions (e.g., compliance with EMIR, acceptance of EU central bank policies); ESMA powers to request information, inspections, supervisory measures, fines.
  - For ‘specifically substantial’ CCPs, Commission may adopt an implementing act declaring the CCP may only provide services if authorized in the EU (effectively relocation).
- Assessment of relocation:
  - Forced relocation of globally systemically important CCPs to the EU cautioned against due to market fragmentation, higher costs, reduced liquidity, increased margin requirements, and transition costs.
  - Estimates of additional margin cost from relocation: €7–10 billion (European Commission estimate); $77 billion (Clarus Financial Technology Group estimate).
  - Policy preference: global deference framework emphasizing cooperation, information sharing, comparable rules (PFMI), and safeguards for home authority responsibility; withdrawal of foreign license or relocation only as last resort.

### ICSDs and central supervision
- ICSD characteristics:
  - Two ICSDs headquartered in the EU: Euroclear Bank (Belgium) and Clearstream Banking S.A. (Luxembourg).
  - Value of securities held on ICSD accounts: nearly €20 trillion at end-2016.
  - Links to more than 50 markets worldwide; settlement in over 40 currencies; euros, U.S. dollars and British pounds largest volumes.
  - Under banking licenses, ICSDs provide cash accounts and credit lines to participants to facilitate settlement.
- Rationale for central EU supervisory approach:
  - High cross-border integration and dependencies, including CCP reliance on a few custody providers for dollar and sterling collateral.
  - Central supervision needed to address cross-border risks and ensure a level playing field among ICSDs.
  - Recommended option: transfer supervision of ICSDs to the SSM, initially building capacity within the SSM to take on this task.
  - Practical starting option: recognize ICSDs as significant institutions under the SSM (no legal framework change required).
  - Further involvement of ECB and/or SSM recommended to ensure consistent implementation and harmonization.

### Size and structure of EU post-trade infrastructure (key figures)
- 16 CCPs established in the EU.
- 28 third-country CCPs recognized under EMIR’s equivalence provisions; a further 12 CCPs from 10 jurisdictions have applied for recognition.
- Two ICSDs headquartered in the EU: Euroclear Bank (Belgium) and Clearstream Banking S.A. (Luxembourg).
- Value of securities held on ICSD accounts: nearly €20 trillion at end-2016.
- 34 national CSDs established in the EU.
- Target2Securities (T2S) launched in 2015; over twenty European CSDs are connected; T2S operations are assigned to four central banks (France, Germany, Italy, Spain).
- Denmark planning to participate in T2S in 2018.

### Recovery and resolution for CCPs
- Commission November 2016 proposal for Regulation on recovery and resolution planning for CCPs:
  - Objectives: preserve CCP critical functions, maintain financial stability, avoid taxpayer costs from restructuring/resolution.
  - National resolution authorities (NRAs) designated in each Member State; NCAs given tools to intervene early.
  - NRAs have harmonized resolution tools/powers; tools include sale of CCP parts, bridge CCP creation, position and loss allocation tools, and bail-in tools.
  - Legislative progress: January 2018 European Parliament agreed on a final compromise text; Council of the EU expected to issue suggestions.

### Cyber resilience and system-wide risk management
- Eurosystem cyber resilience strategy (ECB Governing Council approved March 2017) to implement CPMI-IOSCO guidance for FMIs around three pillars:
  - (i) framework for FMIs to enhance cyber resilience;
  - (ii) structures/mechanisms to mature collective cyber resilience capability via cross-border collaboration, information sharing and exercises;
  - (iii) strategic dialogue between industry and regulators.
- Initiatives:
  - Cyber Resilience Oversight Expectations (CROE).
  - European Red Team Testing Framework (TIBER-EU) for testing FMIs’ protection, detection and response capabilities without warning.
  - Euro Cyber Resilience Board for pan-European Financial Infrastructures established (participation: ECB, NCBs, major FMIs, critical service providers; Commission, EU Agency for Network & Information Security, EBA, ESMA, Europol, and ECB functions invited as observers).
- Implementation next steps:
  - Translate survey/assessment/Red Team findings into FMI-specific action plans as part of supervisory plans.
  - Timely and adequate execution of the cyber resilience strategy is critical for EU financial stability.

### FMI–bank interdependencies and follow-up analysis
- ESMA and ECB have begun analyzing interdependencies among FMIs, members, and markets; further analysis recommended.
- ESMA stress test and network analysis highlight concentrated dependencies:
  - Largest bubble for cash in all currencies: €40 billion.
  - Largest bubble for U.S. dollar cash: €22 billion.
  - Cash and securities exposures together (not shown in Figure 2): largest bubbles €130 billion and €43 billion respectively.
- Implication: EU CCPs jointly may face significant credit and liquidity pressures if a large custodian cannot fulfill its role.
- Specific concerns:
  - Dependencies on a few commercial banks for liquidity and custody of dollar and sterling collateral, potentially exposing CCPs and ICSDs jointly to the same non-euro area commercial banks.
- Possible mitigation measures (illustrative):
  - Increase number of contracted banks.
  - Establish direct links with local CSDs and central banks where possible.
- Nature of the risk:
  - Dependencies on custodians mainly operational; cash exposures mitigated via diversification and overnight repos; securities subject to asset protection regimes.
  - Concentration in a few commercial banks could cause disruptions with implications for EU financial stability.
- ECB actions and gaps:
  - ECB has conducted qualitative interconnectedness analysis and started research using trade repository data; follow-up analysis needed to identify, measure and manage interconnection risks.

### Selected quantitative and disclosure findings (CCP prefunded resources and volumes, end Q3 2017 / Q3 2017 averages)
- BME Clearing: Prefunded financial resources 4,330 (in million EUR); ETD average daily value Q3 2017 8,513 (in million EUR); OTC 3.6 (in million EUR).
- CC&G (Italy): Prefunded financial resources 13,210 (in million EUR); ETD 75,811 (in million EUR).
- CCP.A (Austria): Prefunded financial resources 73 (in million EUR); ETD 261 (in million EUR).
- Eurex Clearing (Germany): Prefunded financial resources 80,866 (in million EUR); Derivatives average daily value Q3 2017 415,571 (in million EUR); OTC 5,337 (in million EUR); Securities 6,063 (in million EUR); Repo 181,095 (in million EUR).
- EuroCCP (Netherlands): Prefunded financial resources 1,119 (in million EUR); ETD 35,278 (in million EUR); OTC 1,464 (in million EUR).
- LCH.Ltd (U.K.): Prefunded financial resources 126,199 (in million EUR); OTC 2,396,065 (in million EUR).
- LCH SA (France): Prefunded financial resources 27,996 (in million EUR); OTC 338,474 (in million EUR).
- LME Clear (U.K.): Prefunded financial resources 7,806 (in million EUR); ETD 89,472 (in million EUR).
- NOMX (Sweden): Prefunded financial resources 5,213 (in million EUR); ETD 3,036 (in million EUR); OTC 9,251 (in million EUR).
- OMIClear (Portugal): Prefunded financial resources 170 (in million EUR); ETD 5.3 (in million EUR).

### Main recommendations (selected, with responsible parties and timing)
- Supervision and Oversight of FMIs:
  - Strengthen oversight of cross-border risks by centralizing supervision of CCPs in ESMA, while strengthening role of central banks of issue (EU). Time: ST
  - Strengthen supervision of third-country CCPs, and cooperation and information sharing with third-country authorities (Commission, ECB, ESMA). Time: I
  - Ensure ESMA has sufficient resources for proposed supervisory activities (Commission, ESMA). Time: I
  - Develop ECB regulations consistent with EMIR for areas in the ECB’s mandate (ECB). Time: ST
  - Bring ICSDs under central supervision and develop needed capacity (SSM, ECB). Time: MT
  - Recognize U.K. CCPs at day of Brexit if U.K. fully equivalent at exit, or alternatively recognize them during a transition period (EU). Time: ST
- System-wide risks:
  - Further harmonize CCPs’ access to central bank accounts and liquidity provision (ECB). Time: ST
  - Further implement cyber resilience strategy at EU level (ECB). Time: I
  - Develop further analytical tools to analyze interdependencies and interconnections between CCPs, (I)CSDs, and financial institutions and markets (ECB, ESMA). Time: ST
- Timing key:
  - “Short-term” (ST) is within one year; “near-term” (I) is one to three years; “medium-term” (MT) is three to five years.

*Source: EXECUTIVE SUMMARY and selected excerpts from IMF country report cr18227.*

### EXECUTIVE SUMMARY ___________________________________________________________________________ 4

### EXECUTIVE SUMMARY

### Key observations on regulatory and supervisory structure
- Regulation, supervision, and oversight of central counterparties (CCPs) and central securities depositories (CSDs) in the euro area is evolving, driven by:
  - Adoption of EMIR in 2012 and the CSD Regulation in 2014, and publication of secondary legislation.
  - Implementation of the Single Supervisory Mechanism (SSM) in 2014, bringing CCPs and CSDs with a banking license under centralized banking supervision as less significant institutions.
  - Commission proposals of June 2017 to change EMIR to further centralize decision making at ESMA and strengthen supervision over third-country CCPs.
  - ECB proposal of June 2017 to amend article 22 of the ESCB/ECB Statute to be able to provide facilities to CCPs and make regulations for CCPs.

- The note’s main objective is to analyze the regulatory and supervisory structure applicable to CCPs and International CSDs (ICSDs) in the EU and assess suitability against international standards and good practices (PFMI / CPSS-IOSCO 2012), building on previous FSAPs and CPMI-IOSCO implementation monitoring.

### Systemic importance and concentration of risk
- A significant portion of over-the-counter (OTC) traded derivatives now clear through CCPs, concentrating risk in CCPs that are highly interconnected with euro area and global banks.
- Current national competent authority (NCA)-based authorization and supervision model, coordinated through supervisory colleges with ESMA and central banks of issue (CBIs), has increased consistency but does not ensure a full level playing field across the EU.

### Findings on appropriate institutional arrangements
- Centralizing supervision of CCPs in ESMA is recommended to:
  - Ensure a consistent approach to cross-border risks.
  - Enhance the level playing field among CCPs.
  - Require ESMA to have sufficient resources and qualified staff to be fully effective.

- Strengthening the role of central banks of issue (CBIs) in CCP supervision is recommended because:
  - CBIs are potential liquidity providers for CCPs and need necessary information and comfort.
  - CBIs provide a broader financial system stability perspective complementary to ESMA’s financial regulator perspective.
  - Potential ECB regulations for CCPs should be consistent with EMIR and limited to areas within the ESCB’s mandate to avoid overlap and inconsistencies.

### Central bank accounts and liquidity access
- Recommendation to further develop a harmonized ECB/Eurosystem policy for CCPs’ access to central bank accounts and liquidity provision:
  - Access for all CCPs authorized under EMIR to deposit cash collateral at central bank accounts would reduce dependence on commercial banks and related operational and liquidity risks.
  - Access to central bank liquidity arrangements, under certain conditions, would reduce CCPs’ dependence on commercial banks and repo markets for liquidity, providing a safety net in times of market strain.
  - A dedicated, harmonized policy is needed for all CCPs, without distinction between CCPs with and without a banking license, and addressing third-country CCPs to ensure a level playing field.
  - Acknowledges extreme circumstances where CCPs’ liquid resources may be insufficient/unavailable and central bank intervention could be necessary.

### Third-country CCPs and cross-border cooperation
- Strengthening supervision of third-country CCPs is warranted, but the note favors strong cooperation and information sharing with third-country authorities over forced relocation of clearing to the EU for CCPs servicing global markets.
- Increased requirements for third-country CCPs, with ongoing supervision by ESMA, are warranted to reduce the risk that changes in their risk management go undetected with negative consequences for EU markets.
- Forced relocation of a globally systemically important CCP to the EU is cautioned against because:
  - It may lead to market fragmentation, increased cost, and reduced market liquidity.
  - It opposes market globalization and may set a precedent for other jurisdictions to request relocation.
- The preferred approach is a global deference framework with:
  - Strong cooperation and information sharing among authorities.
  - Application of comparable rules.
  - Safeguards to ensure appropriate home authority responsibilities.

### ICSDs and central supervision
- ICSDs (Euroclear Bank and Clearstream Banking S.A.) are highly interconnected and systemically important globally:
  - Value of securities held on their accounts was nearly €20 trillion at the end of 2016.
  - They maintain links to more than 50 markets worldwide with settlement in over 40 currencies; euros, U.S. dollars, and British pounds represent the largest volumes.
  - Under banking licenses, ICSDs provide cash accounts and credit lines to participants to facilitate settlement.
- Given cross-border integration and dependencies (including reliance by CCPs on a few custody providers for dollar and sterling collateral), a central EU supervisory approach is needed to address cross-border risks and ensure a level playing field among ICSDs.
- A recommended option: transfer supervision of ICSDs to the SSM, initially building capacity within the SSM to take on this task.

### Size and structure of EU post-trade infrastructure (key figures)
- 16 CCPs established in the EU.
- 28 third-country CCPs recognized under EMIR’s equivalence provisions; a further 12 CCPs from 10 jurisdictions have applied for recognition.
- Two ICSDs headquartered in the EU: Euroclear Bank (Belgium) and Clearstream Banking S.A. (Luxembourg).
- Value of securities held on ICSD accounts: nearly €20 trillion at end-2016.
- 34 national CSDs established in the EU.
- Target2Securities (T2S) launched in 2015; over twenty European CSDs are connected; T2S operations are assigned to four central banks (France, Germany, Italy, Spain).
- Denmark planning to participate in T2S in 2018.

### Main recommendations (from Table 1)
- Supervision and Oversight of FMIs
  - Strengthen oversight of cross-border risks by centralizing supervision of CCPs in ESMA, while strengthening the role of central banks of issue (EU). Time: ST
  - Strengthen supervision of third-country CCPs, and cooperation and information sharing with third-country authorities (Commission, ECB, ESMA). Time: I
  - Ensure ESMA has sufficient resources for the proposed supervisory activities (Commission, ESMA). Time: I
  - Develop ECB regulations consistent with EMIR for areas that are in the ECB’s mandate (ECB). Time: ST
  - Bring ICSDs under central supervision and develop needed capacity (SSM, ECB). Time: MT
  - Recognize U.K. CCPs at the day of Brexit, under the condition that the United Kingdom is fully equivalent at the point of exit, or alternatively recognize them during a transition period (EU). Time: ST

- System-wide risks
  - Further harmonize CCPs’ access to central bank accounts and liquidity provision (ECB). Time: ST
  - Further implement the cyber resilience strategy at EU level (ECB). Time: I
  - Develop further analytical tools to analyze interdependencies and interconnections between CCPs, (I)CSDs, and financial institutions and markets (ECB, ESMA). Time: ST

- Timing key: “Short-term” is within one year; “near-term” is one to three years; “medium-term” is three to five years.

### Scope and methodology
- The note analyzes regulation and supervision of CCPs and CSDs, with a focus on ICSDs, cross-border risks, interdependencies among FMIs, members and markets, and cyber risks.
- Analysis is based on international standards (PFMI CPSS-IOSCO 2012), previous FSAP findings, the EU FSAP of 2013, and CPMI-IOSCO implementation monitoring assessments.
- Annexes referenced provide overviews of individual EU country FSAPs with FMI components, status of implementation of EU FSAP 2013 recommendations, and EU (I)CSD and CCP statistics.

*Source: EXECUTIVE SUMMARY (cr18227).*

### 9.      CCPs and CSDs are supervised by NCAs based on EU Regulations. One or more NCAs are

### 9.      CCPs and CSDs are supervised by NCAs based on EU Regulations. One or more NCAs are

### Regulatory framework and scope
- Authorization and supervision of CCPs is based on EMIR (Regulation (EU) No 648/2012). EMIR includes:
  - common rules for CCPs,
  - a passport for CCP services,
  - a clearing obligation for eligible OTC derivatives,
  - rules governing trade repositories.
- Authorization and supervision of (I)CSDs is based on the CSD Regulation (Regulation (EU) No 909/2014), which contains rules governing CSDs, including provisions to harmonize both the timing and conduct of securities settlement.
- Each EU country specifically designates one or more NCAs as authority/ies for authorization and supervision of CCPs and/or (I)CSDs established in their territory.

### Supervisory colleges, relevant authorities, and institutional roles
- CCP colleges:
  - A college of supervisors is established for each CCP.
  - Composition: NCAs, other EU national authorities supervising entities impacting CCP operations (selected clearing members, trading venues, interoperable CCPs and CSDs), members of the ESCB (as overseer and central bank of issue), and ESMA.
  - The college provides NCAs with an opinion on CCP compliance with EMIR at authorization and at other points in the supervisory cycle.
- CSD supervisory arrangements:
  - No colleges are required for CSDs.
  - The CSD Regulation identifies, in addition to the NCA, relevant authorities: central banks overseeing the CSD, EU central banks issuing the most relevant currencies in which settlement takes place, and where relevant, the EU central bank in which the cash leg of the transaction is settled.
  - NCAs responsible for CSD supervision should consult and cooperate with relevant authorities according to ESMA guidelines.
  - If a CSD has subsidiaries in several member states, the NCA must cooperate with authorities responsible for supervising those subsidiaries, including information sharing in emergencies.
  - If a CSD is of substantial importance in more than one host member state, the home member state may include colleges of supervisors in cooperation arrangements; such colleges do not foresee ESMA participation.
- Other EU authorities and roles:
  - European Commission: establishes technical aspects of the regulatory framework following proposals from ESMA and EBA; proposes primary legislation and adopts secondary legislation.
  - ESMA: develops RTS in coordination with the ESCB; represented in CCP colleges in a non-voting capacity; provided binding mediation powers; coordinates between NCAs and across CCP colleges; uses annual peer reviews, guidelines, recommendations, opinions and Q&As; initiates and coordinates the annual EU-wide CCP stress test (second report issued in February 2018); responsible for cooperation arrangements with third-country authorities and recognition of a CCP or CSD from a third country; organizes peer reviews of CSD supervision at least every three years for CSDs that provide services in another member state or participate in interoperable links (after consulting ESCB members).
  - ESCB/Eurosystem: participates in CCP colleges as overseer or CBI; involved in drafting technical standards, guidelines and recommendations (ESMA has final responsibility); involved in authorization and supervision of CCPs and CSDs, recognition of third-country CCPs/CSDs and approval of links. The Eurosystem comprises the ECB and NCBs of euro adopters. Typically, the ECB represents the Eurosystem as CBI in CCP colleges outside the euro area, whereas the NCB represents the Eurosystem as CBI in the supervisory college of the CCP established in that country.
  - SSM: CCPs and CSDs with a banking license also fall under the SSM. They have been categorized as less significant institutions, implying direct supervision by the SSM-NCAs and supervisory oversight by the ECB-SSM.
  - EBA: FMIs with a banking license are subject to CRR, CRD IV and BRRD for credit institutions and additional reporting (COREP, Basel Pillar 3); subject to additional requirements prepared by EBA.
  - ESRB: monitors and assesses systemic risks, can issue opinions, warnings and recommendations; has a task force on CCPs; published an opinion on recovery and resolution for CCPs and on CCP interoperability and procyclicality arrangements.

### Findings from recent national FSAPs and international assessments
- FSAP conclusions:
  - Recent national euro area FSAPs found that regulation, supervision and oversight of CCPs is generally sound and in line with international standards.
  - NCAs and other authorities generally conduct supervision and oversight in line with the five responsibilities of the PFMI, including supervisory practices, available resources, transparency, adoption of international standards and coordination/cooperation mechanisms domestically and cross-border.
  - Where weaknesses were identified, follow-up occurs in individual country FSAPs.
- ESMA and CPMI-IOSCO evidence:
  - ESMA’s credit and liquidity stress testing results indicate overall EU CCP resilience to multiple clearing member defaults and extreme market shocks.
  - CPMI-IOSCO found EMIR and accompanying technical standards for CCPs to be consistent or broadly consistent with a majority of the PFMI principles; observed gaps relate to instances where regulations do not address ex ante planning requirements (e.g., recovery plans).
  - For most participating individual EU countries, effective central bank oversight on top of EMIR and RTS achieved full consistency with the PFMI.
- ICSD supervision:
  - Supervision and oversight of the two ICSDs is generally sound and in line with international standards, although FSAPs recommended increased involvement of the ECB and/or SSM.
  - Legal and regulatory frameworks provide authorities with powers to obtain timely information and induce change.
  - FSAPs recommended strengthening cooperation and information sharing arrangements at the international level and involving international authorities and central banks in assessments of the ICSDs.
  - Involvement of the ECB and/or SSM would help ensure consistent implementation of supervisory requirements and harmonization benefits, promoting a level playing field.

### Centralization versus decentralization of supervision
- Commission proposals (June 2017) as part of EMIR Review:
  - Proposes endowing ESMA with direct supervisory powers while NCAs remain responsible for direct supervision of EU CCPs.
  - CCP colleges chaired and managed by an ESMA representative; ESMA contributes three voting members to each college.
  - ESMA responsibilities: provide prior consent for certain decisions, propose amendments to draft decisions, adopt decisions directly addressed to a CCP, participate in on-site inspections, request specific supervisory action.
  - Proposal entails organizational changes at ESMA, including increased staff: Commission proposes 49 additional full-time staff, whereas ESMA currently employs 8 full time staff for its CCP activities.
- Proposed stronger role for the CBI:
  - Decisions on authorization, interoperability, liquidity risk controls, collaterals and settlement must be submitted to CBIs of the respective CCP college.
  - CBI consent required on aspects related to monetary policy tasks; if CBI proposes amendments they must be implemented; if CBI objects, no decision is possible.
  - ESMA would need prior consent from relevant CBI for decisions on margins, liquidity risk controls, collateral, settlement and interoperability as part of ongoing supervision of recognized third-country CCPs.
- Mission’s assessment and rationale for further centralization:
  - Further centralization would help address negative cross-border externalities:
    - In times of stress, a central supervisory authority would explicitly consider pan-European financial stability; current international coordination could be challenging if a default impacts multiple jurisdictions, possibly delaying responses and harming financial stability.
    - A central supervisor better ensures a level playing field and reduces divergent interpretations of EMIR by NCAs and college members; ESMA identified substantial differences in supervisory practices reflected in annual peer reviews.
    - Centralized supervision increases efficiencies in the single market by eliminating duplication of tasks and creating economies of scale, reducing the number of supervisory authorities and administrative burden.
  - ESMA as central supervisor:
    - ESMA is a logical candidate due to its existing central role under EMIR (promoting supervisory consistency, participating in colleges, drafting technical standards, acting as access point for third-country CCPs, supervising trade repositories).
    - A prerequisite is sufficient competent resources: the proposed 49 additional staff for 17 CCPs and a range of tier 1 and 2 CCPs seems somewhat low given the number of CCPs and risk management responsibilities.
    - Additional resources should be recruited from NCAs to ensure appropriate knowledge and expertise.
    - Responsibilities of ESMA as CCP supervisor should be clearly defined relative to resolution authorities.
  - ECB role:
    - A stronger role for the ECB, focused on financial stability, would be desirable.
    - Current single vote for EU CBIs in EMIR colleges is shared with SSM where relevant and does not give the ECB sufficient powers to execute its mandate (price stability, monetary policy, payment systems, liquidity provision).
    - The ECB’s mandate should be broadened to cover general financial stability responsibilities; as CBI for the euro area it would bring financial stability perspective complementing ESMA’s market-regulator perspective.
    - A stronger role for the CBI entails strong influence in authorization and supervision decisions and the right to receive all necessary information.
  - Legal basis and overlap:
    - Extension of the ECB Statute is welcome to provide a legal basis for the ECB’s role in CCP supervision (as per June 2017 Commission proposal), but potential overlap and inconsistencies with EMIR should be avoided.
    - In June 2017, the ECB proposed amending Article 22 of the Statute of the ESCB and the ECB to allow facilities and regulations “to ensure efficient and sound clearing and payment systems, and clearing systems for financial instruments, within the EU and with other countries.”
    - Potential ECB regulations for CCPs should be consistent with EMIR and limited to areas in the ECB’s mandate.
- Resource example for supervisory staffing:
  - The daily supervision of 1 CCP would require 1-4 full time staff, dependent on size, interconnectedness, substitutability and complexity of the CCP. Additional staff resources are needed to analyze CCPs’ risk management models, conduct thematic analysis and conduct peer reviews.

### Recovery and resolution for CCPs (status and proposals)
- Commission proposal (November 2016) for a Regulation on recovery and resolution planning for CCPs aims to preserve CCP critical functions, maintain financial stability and avoid taxpayer costs from restructuring or resolution.
- Key elements of the proposal:
  - National resolution authorities (NRAs) designated in each Member State (could be national central banks, ministries or existing supervisory authorities).
  - NCAs given tools and powers to intervene in a CCP infringing or likely to infringe prudential requirements at an early stage to address developing CCP financial problems.
  - NRAs have harmonized resolution tools and powers when CCP failure cannot be avoided; the proposed Regulation does not mandate specific tools but leaves choice to the resolution authority; where practicable, the NRA should act in line with the agreed resolution plan.
  - Tools include: sell all or part of the failing CCP to another entity; create a bridge CCP; position and loss allocation tools; and bail-in tools.
- Legislative progress:
  - In January 2018, the European Parliament agreed on a final compromise text. The Council of the EU is also expected to issue its suggestions.

### Cooperation within the Eurosystem and supervision of ICSDs
- Eurosystem cooperation:
  - Cooperation has been strengthened since the previous FSAP.
  - A dedicated committee structure with FMI experts of the ECB and other Eurosystem central banks facilitates development of joint Eurosystem opinions on authorization and supervision issues requiring a vote within EMIR colleges.
  - An escalation procedure with potential involvement of the Governing Council strengthens procedures to reach a common position.
- ICSD centralization recommendation:
  - The mission considers further centralization of supervision of the two international CSDs important, for example under the SSM, as recommended in previous FSAPs.
  - Euroclear Bank and Clearstream Banking S.A. are currently supervised by Belgian and Luxembourg authorities respectively, with limited involvement of ESMA, ECB and SSM.
  - Adoption of the CSD Regulation has strengthened information sharing and cooperation, but the CSD Regulation does not require ESMA or the ECB to promote consistent supervisory practices.
  - Given high systemic importance of ICSDs, further centralization would help address cross-border risks, limit regulatory capture, and promote a level playing field.
  - Possible roles: ESMA as financial regulator, ECB as financial stability overseer (leveraging experience overseeing Target2, T2S and Euro1), SSM as banking regulator.
  - A practical starting option: recognize ICSDs as significant institutions under the SSM (does not require legal framework changes).
  - The SSM has developed a dedicated supervisory approach for FMIs with a banking license but further capacity building within the SSM is needed for a central supervisory role.

*Source: IMF country report text (cr18227) excerpt.*

### 25.      Brexit will impact CCPs and their members. Post-Brexit, the United Kingdom will become

### cr18227 - 25.      Brexit will impact CCPs and their members. Post-Brexit, the United Kingdom will become

### Immediate implications for CCPs and their members
- Post-Brexit, the United Kingdom will become a third-country for EMIR purposes, meaning that, unless a general equivalence decision were issued in respect of the U.K. regulatory regime, U.K.-based CCPs would need to apply for recognition from ESMA in order to continue to provide services to EU counterparties.
- EU banks would no longer be permitted to maintain positions in U.K. CCPs that are no longer authorized or recognized under EU regulations.
- Consequences for EU banks:
  - They would need to maintain higher capital buffers.
  - In the case of mandatory OTC derivatives clearing, they would not be able to fulfil their clearing obligation under EMIR in CCPs established in the United Kingdom as long as those CCPs are not recognized by ESMA under EMIR.
- Existing interoperability arrangements between U.K. and EU CCPs may have to be halted until the relevant U.K. CCPs have been recognized under EMIR, disturbing current clearing arrangements and increasing market inefficiencies.

### Transitional recommendations
- Recommended that U.K. CCPs are recognized at the day of Brexit, under the condition that the United Kingdom is fully equivalent at the point of exit.
- Noted legal constraint: as current EMIR provisions are worded, the Commission cannot grant equivalence until the United Kingdom is a third-country, creating a risk that U.K. CCPs are not recognized on the date of Brexit.
- Alternative recommended approach: allow U.K. CCPs to continue providing clearing services to EU banks during a transition period until the Commission has determined that the United Kingdom’s clearing regime can be considered equivalent.
- Reference: the announcement on March 19, 2018, on an agreement between the U.K. and EU on a 21-month Brexit transition period is welcomed in that regard.

### Concentration of risk and systemic importance of LCH Ltd
- The ECB estimates that the large majority of euro-denominated derivatives clearing, originating from euro area banks, takes place on LCH Ltd.
- Key statistics:
  - Clearing by EU members on LCH Ltd amounts to more than €500 billion on average per day.
  - The notional amount outstanding on LCH Ltd is €83 trillion for euro-denominated interest rate derivatives.
  - The notional amount outstanding at the U.S. Chicago Mercantile Exchange is EUR 1.8 trillion for euro-denominated interest-rate derivatives.
  - LCH calculated that EU banks are responsible for 14 percent of LCH Ltd interest rate derivatives’ volumes of which 7 percent in euro-denominated interest swaps.
- Systemic risk channels:
  - Failure of LCH Ltd could expose euro area banks to losses (e.g., cash calls following a member default) and non-default losses could propagate to euro area banks.
  - Risk of pro-cyclicality of margin calls: falling asset prices can trigger additional margin calls and increased collateral haircuts, leading to abrupt increases in collateral requirements and strains on banks’ liquidity.

### EU proposals for third-country CCP supervision and categorization
- The Commission’s proposal envisages ESMA categorizing third-country CCPs into:
  - (i) CCPs that are not systemically important (tier 1) — continue under current third-country equivalence arrangements;
  - (ii) CCPs deemed to be systemically important for financial stability of the EU (tier 2) — would need to meet special conditions, such as compliance with EMIR, and accepting policies put in place by EU central banks;
  - (iii) a subset of tier 2 CCPs, of ‘specifically substantial systemic significance’ for the EU financial system — ESMA can recommend to the Commission that these CCPs should not be recognized in the EU.
- Under the proposal, ESMA would have powers to request information, conduct investigations and on-site inspections, and take supervisory measures, fines and penalty payments for tier 2 CCPs.
- For CCPs of ‘specifically substantial systemic significance’, the Commission may adopt an implementing act declaring that the CCP may only provide services in the EU if it is authorized in the EU, which effectively would require relocation to the EU.

### Assessment of relocation and alternative approaches
- Concerns about relocation:
  - Forced relocation of a globally systemically important CCP to the EU is expected to negatively impact EU markets.
  - Expected consequences include market fragmentation, higher trading costs, reduced market liquidity, increased margin requirements due to losses in netting efficiencies, and transition costs related to closing and reopening affected transactions.
- Estimates of additional margin cost from relocation:
  - €7–10 billion (European Commission estimate).
  - $77 billion (Clarus Financial Technology Group estimate).
- Policy preference: a global deference and cooperation framework is preferred over relocation.
  - A global deference framework: strong cooperation and information sharing among authorities, application of comparable rules (e.g., based on the PFMI), and safeguards to ensure home authority responsibility and host authority comfort.
  - Withdrawal of a foreign CCP’s license or relocation requirement should be a last resort and only in extreme circumstances (PFMI, Responsibility E).

### Macroprudential issues and CCP linkages with sovereign markets
- CCPs commonly hold large pools of government securities as collateral in the same currency as cleared transactions.
- CCP risk management requires increases in collateral haircuts and additional margin calls during sovereign stress, which can exacerbate market stress by reducing bank liquidity (example: November 2011, LCH Clearnet SA raised requirements on positions in Italian government securities by 500 basis points on 7–10-year maturities).
- EMIR and related RTS provide measures that EU CCPs should take to manage procyclicality risks of margin calls.
- ESMA is refining guidelines for supervisory convergence to prevent excessive procyclicality.
- Further analysis by the ESRB may point to the usefulness of potential macroprudential measures, such as floors and countercyclical buffers.

### Shift of euro-denominated repo clearing to the euro area
- LCH’s RepoClear segment in London currently clears substantial amounts of cash bond and repo trades for euro area countries: Austria, Belgium, Germany, Ireland, Finland, Netherlands, Portugal, Slovakia, Slovenia, and Spain.
- LCH S.A. in Paris also clears cash bond and repo trades for euro area countries: Belgium, France, Germany, Italy, and Spain.
- LCH Group is reforming its infrastructure to allow all euro-denominated bonds and repos to be cleared in Paris.
- Expected benefits of moving euro repos to Paris:
  - Market participants can benefit from netting efficiencies in settlement of cash (in Target2) and securities (in T2S).
  - Euro-denominated repo clearing would be within the euro area, providing EU authorities with direct supervisory powers and ensuring the Eurosystem has access to information, important for monetary policy implementation.

### Cyber resilience and broader system-wide risk management
- European authorities have undertaken initiatives to enhance cyber resilience of FMIs:
  - In March 2017, the ECB’s Governing Council approved the Eurosystem’s cyber resilience strategy to support implementation of the CPMI-IOSCO guidance for FMIs.
  - The strategy centers on three pillars:
    - (i) a framework for FMIs to enhance their level of cyber resilience;
    - (ii) structures and mechanisms to mature collective cyber resilience capability through cross-border/cross-authority collaboration, information sharing and exercises;
    - (iii) a strategic dialogue between industry and regulators to catalyze joint initiatives and develop effective solutions.
  - The Eurosystem is advancing assessment of CCPs’ and CSDs’ cyber resilience capabilities through a cyber questionnaire and has developed Cyber Resilience Oversight Expectations (CROE).
  - A European Red Team Testing Framework (TIBER-EU) has been developed to test FMIs’ protection, detection and response capabilities without warning.
  - The Euro Cyber Resilience Board for pan-European Financial Infrastructures was established by the ECB, with participation of the ECB, NCBs, major FMIs, and critical service providers, such as SWIFT; the Commission, the European Union Agency for Network & Information Security, the EBA, ESMA, Europol, and ECB Information System and Banking Supervision functions are invited as observers.

*Source: cr18227 (IMF chapter)*

### 38.      Further implementation of the plans is the next step. Timely and adequate execution of

### cr18227 - 38.      Further implementation of the plans is the next step. Timely and adequate execution of

### Cyber resilience: implementation and next steps
- Further implementation of the plans is the next step. Timely and adequate execution of the cyber resilience strategy is critical for EU’s financial stability.
- Findings on cyber risk defenses of FMIs, following the survey, assessment against the CROE, and Red Team testing, would need to be translated into FMI specific action plans to solve any gaps, for example, as part of its supervisory plan.

### FMI–bank interdependencies: findings and areas for follow-up analysis
- ESMA and the ECB have started to analyze interdependencies between FMIs, their members, and financial markets; further analysis is recommended.
- ESMA’s stress test provides a rich analysis of CCPs’ resilience against credit and liquidity shocks and contains an analysis of interconnections among CCPs and banks (as clearing member, custodian and liquidity provider).
- Key quantified dependencies (cash exposures, CCPs on custodians):
  - Largest bubble in Figure 2 for cash in all currencies: €40 billion.
  - Largest bubble in Figure 2 for U.S. dollar cash: €22 billion.
  - For cash and securities exposures together (not shown in Figure 2): largest bubbles are €130 billion and €43 billion respectively.
- Implication: EU CCPs jointly may face significant credit and liquidity pressures if one of these large custodians would be unable to fulfil its role.
- ECB actions and gaps:
  - The ECB has conducted a qualitative interconnectedness analysis of FMIs in the EU and their links with banks as service providers, and has started researching interdependencies with help of trade repository data.
  - Follow up analysis is needed to obtain a more complete picture of the size of the interconnections for all types of FMIs, in order to be able to identify, measure and manage risks related to these interconnections and interdependencies.
- Specific concern: dependencies of CCPs and ICSDs jointly on non-euro custodians and liquidity providers
  - There are dependencies on a number of commercial banks providing liquidity services; in times of crisis, CCPs and ICSDs may all seek liquidity support from the same entities.
  - ESMA’s recent stress tests of CCPs show a large dependency of CCPs on only a few institutions that provide custody services for dollar and sterling collateral, including ICSDs.
  - Follow up research could analyze where the ICSDs on their turn keep these dollar and sterling collateral; expectation is dependence on the same non-euro area commercial banks as CCPs, potentially exposing CCPs and ICSDs jointly to these banks.
- Possible mitigation measures (illustrative examples noted in the source):
  - Increase in the number of contracted banks.
  - Where possible, establishment of direct links with local CSDs and central banks.
- Nature of the risk:
  - Dependencies on custodians are mainly operational in nature (cash exposures are mitigated through diversification and overnight repo’s; securities are subject to asset protection regimes).
  - However, concentration of risks in only a few commercial banks may cause disruptions with implications for the EU’s financial stability.

### Access to central bank facilities: current arrangements, inconsistencies, and recommendations
- TARGET2 accounts and intraday credit:
  - CCPs may open accounts in TARGET2. Opening accounts is subject to the harmonized conditions of the TARGET2 Guideline.
  - NCBs and the ECB (in particular for clearing and settlement organizations outside of the EEA) may open the TARGET2 account, and may grant access to intraday credit.
- Emergency lending facilities and complexity:
  - CCPs with banking licenses (Eurex Clearing and LCH S.A.) have the potential to be counterparts under the ECB’s standard framework, including access to the ECB’s marginal lending facility and the U.S. dollar swap facility.
  - In 2010, the possibility of providing euro area CCPs with access to marginal lending facility at the discretion of the Governing Council was introduced into the TARGET2 Guideline.
  - FX needs from nonbank euro area CCPs may be considered under the NCB ELA arrangements at national risk.
  - For CCPs domiciled outside of the euro area, the ECB/Eurosystem may establish liquidity arrangements in line with the announcement of the international central banks on “working towards a regime that ensures there are no technical obstacles for the timely provision of emergency liquidity assistance by central banks to solvent and viable CCPs, without pre-committing to the provision of this liquidity”.
  - A dedicated arrangement was put in place by the ECB and the Bank of England (BoE). The scope of the BoE-ECB standing FX swap arrangement was extended to cover potential emergency liquidity provision in euro to certain U.K. CCPs.
  - If the swap line be activated for the relevant U.K. CCPs, the credit risk of the CCPs would not be borne by the ECB. The ECB would be lending to the BoE.
- Lack of fully harmonized policy and unlevel playing field:
  - Practices for cash deposits vary greatly among CCPs, with some CCPs using central bank accounts actively, while others only use commercial bank accounts.
  - The two CCPs with a banking license will receive a different (normally higher) remuneration on the deposit account, part of the ECB’s standard framework, than CCPs without banking license that have access to a current account.
  - The different treatment of CCPs in this area is not in line with the spirit of CCPs competing in the single market.
- Recommendations (policy harmonization):
  - Further harmonize the ECB/Eurosystem’s policy for CCPs’ access to central bank accounts and liquidity provision across the EU, and within the euro area.
  - Access for all CCPs authorized under EMIR to central bank accounts and liquidity arrangements, under certain conditions, reduces CCPs’ dependence on commercial banks and repo markets for liquidity, providing a safety net in times of market strain, which is critical to financial stability.
  - A dedicated, harmonized policy is needed for all CCPs, without distinction between CCPs with and without a banking license, to ensure a level playing field, both for euro and FX liquidity.
  - Third country CCPs’ needs should also be addressed (e.g., through direct Target2 accounts or other arrangements) to reduce their dependence on commercial banks, if certain requirements are met.
  - The ECB/Eurosystem should take the lead in developing such a policy.
- Additional considerations noted in the source:
  - Banking licenses for CCPs are a legacy from pre-EMIR times; national approaches vary (example: in France mandatory, in Germany optional, in the Netherlands not possible given national transposition of the EU Capital Requirements Directive).
  - The 2018 Euro FSAP Technical Note on Systemic Liquidity recommends an assessment of the potential for CCPs to dis-intermediate the banking system by relying on the ECB’s deposit facility for liquidity management, especially in a liquidity stress scenario, and recommends that the ECB/Eurosystem assess the merits of introducing measures, such as ECB deposit facility remuneration limits.

### Selected quantitative and disclosure findings from ESMA and CCPs (as presented)
- Figure 2 networks (cash only):
  - Network of CCPs and top 10 custodians for cash only, in all currencies — Largest Bubble is EUR 40 billion.
  - Network of CCPs and custodians for cash only, in USD — Largest Bubble is EUR 22 billion.
  - Source: ESMA Report, EU-wide CCP Stress Test 2017.
- Use of central bank accounts for deposits by EU CCPs:
  - Disclosure periods: 2016 Q4, 2017 Q1, 2017 Q2, 2017 Q3.
  - Deposit categories shown include: Unsecured deposits at commercial banks; Unsecured committed lines of credit; Secured deposits at commercial banks; Secured committed lines of credit; Other; Highly marketable securities; Central bank deposits.
  - Source: CCPs’ Public Quantitative Disclosures.
- Appendix III (selected CCP figures, per end Q3 2017 and Q3 2017 average daily values):
  - BME Clearing: Prefunded financial resources 4,330 (in million EUR); ETD average daily value Q3 2017 8,513 (in million EUR); OTC 3.6 (in million EUR).
  - CC&G (Italy): Prefunded financial resources 13,210 (in million EUR); ETD 75,811 (in million EUR).
  - CCP.A (Austria): Prefunded financial resources 73 (in million EUR); ETD 261 (in million EUR).
  - Eurex Clearing (Germany): Prefunded financial resources 80,866 (in million EUR); Derivatives average daily value Q3 2017 415,571 (in million EUR); OTC 5,337 (in million EUR); Securities 6,063 (in million EUR); Repo 181,095 (in million EUR).
  - EuroCCP (Netherlands): Prefunded financial resources 1,119 (in million EUR); ETD 35,278 (in million EUR); OTC 1,464 (in million EUR).
  - LCH.Ltd (U.K.): Prefunded financial resources 126,199 (in million EUR); OTC 2,396,065 (in million EUR).
  - LCH SA (France): Prefunded financial resources 27,996 (in million EUR); OTC 338,474 (in million EUR).
  - LME Clear (U.K.): Prefunded financial resources 7,806 (in million EUR); ETD 89,472 (in million EUR).
  - NOMX (Sweden): Prefunded financial resources 5,213 (in million EUR); ETD 3,036 (in million EUR); OTC 9,251 (in million EUR).
  - OMIClear (Portugal): Prefunded financial resources 170 (in million EUR); ETD 5.3 (in million EUR).
  - Source: CCPs’ Public Quantitative Disclosures.

_International Monetary Fund — cr18227 (excerpt provided)_

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18227.pdf_