(7)From 1 January 2021, UK CCPs will be considered as ‘third-country CCPs’ within the meaning of Regulation (EU) No 648/2012 and, as such, may not provide clearing services in the Union, unless they are recognised by the European Securities and Markets Authority (‘ESMA’) in accordance with Article 25 of that Regulation. ESMA may only recognise a CCP established in a third country where the Commission has adopted an implementing act determining that the legal and supervisory arrangements governing CCPs from that country are equivalent to the requirements set out in Regulation (EU) No 648/2012 and after it has determined whether the CCP is systemically important for the financial stability of the Union. In the absence of the recognition of UK CCPs, counterparties established in the Union may not clear OTC derivatives that are subject to the clearing obligation set out in Article 4 of Regulation (EU) No 648/2012 in UK CCPs. That situation may result in temporary challenges for those counterparties to fulfil their clearing obligations, which in turn may pose risks to the financial stability and the implementation of the monetary policy of the Union and its Member States. It is therefore necessary in that unprecedented situation, provided that the legal and supervisory arrangements governing UK CCPs are determined as equivalent, that those CCPs may continue to provide clearing services in the Union for a limited period of time and under specific conditions.