The European Securities and Markets Authority (ESMA), the pan-European financial regulatory oversight body, has announced the withdrawal of its recognition of the Dubai Commodities Clearing Corporation (DCCC). The decision comes after the Joint Board of Appeal of the European Supervisory Authorities (EBA, EIOPA, and ESMA) unanimously dismissed the appeal brought by DCCC against ESMA's initial decision.
DCCC, which operates as a unit of the Dubai Gold & Commodities Exchange (DGCX), had appealed ESMA's decision to withdraw its recognition as a Tier 1 third-country central counterparty (CCP) under Article 25p of Regulation (EU) No 648/2012 (EMIR).
ESMA's decision to withdraw recognition stems from the European Commission's inclusion of the United Arab Emirates (UAE) on the list of high-risk third countries with strategic deficiencies in their anti-money laundering and counter financing of terrorism (AML/CFT) regime, as outlined in the Commission Delegated Regulation (EU) 2016/1675.
The Board had previously suspended ESMA's decision in October 2023 pending the outcome of the appeal. However, with the unanimous dismissal of the appeal, the suspension has expired, and ESMA's decision to withdraw recognition of DCCC has now become fully operational.
This development has significant implications for the Dubai Commodities Clearing Corporation and its operations within the European Union. The withdrawal of recognition may impact the ability of DCCC to provide clearing services for EU-based market participants, who may need to seek alternative clearing arrangements.
ESMA's decision highlights the importance of robust AML/CFT measures and adherence to international standards in the global financial system. By withdrawing recognition, ESMA aims to ensure the integrity and stability of EU financial markets and protect investors from potential risks associated with third-country entities operating in high-risk jurisdictions.
Market participants and stakeholders are advised to review their clearing arrangements and take appropriate measures in light of ESMA's decision. ESMA remains committed to maintaining a secure and transparent financial environment within the European Union.
