L 311/62 Official Journal of the European Union 31.10.2014 COMMISSION IMPLEMENTING DECISION of 30 October 2014 on the equivalence of the regulatory framework of Hong Kong for central counterparties to the requirements of Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories (2014/754[EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (') and in particular Article 25(6) thereof, Whereas: (1)  The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regula- tory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence decision provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (OTC)) derivative contracts, including where those CCPs are established and authorised in a third country. (2)  In order for a third country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantial outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assess- ment is therefore to verify that the legal and supervisory arrangements of Hong Kong ensure that CCPs estab- lished and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. (3)  On 1 September 2013, the Commission received the technical advice of the European Securities and Markets Authority (ESMA') on the legal and supervisory arrangements applicable to CCPs authorised in Hong Kong. The technical advice identified a number of differences between the legally binding requirements applicable, at a juris- dictional level, to CCPs in Hong Kong and the legally binding requirements applicable to CCPs under Regulation (EU) No 648/2012. This Decision is not only based, however, on a comparative analysis of the legally binding requirements applicable to CCPs in Hong Kong, but also on an assessment of the outcome of those requirements, and their adequacy to mitigate the risks that clearing members and trading venues established in the Union may be exposed to in a manner considered equivalent to the outcome of the requirements laid down in Regulation (EU) No 648/2012. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account. (4)  In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation. (5)  According to the first condition, CCPs authorised in a third country must comply with legally binding require- ments which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012. (6)  The legally binding requirements of Hong Kong for CCPs authorised therein consist of the Clearing and Settle- ment Systems Ordinance (‘CSSO’) and the Securities and Futures Ordinance (‘SFO’). Entities authorised under the CSSO are regulated by the Hong Kong Monetary Authority (HKMA') and entities authorised under the SFO are () 0JL201,27.7.2012,p. 1.