The active account requirement (AAR) under the European Market Infrastructure Regulation (EMIR 3.0) is set to come into force on 24 June 2025. With only about a month to go now, Eurex’s global head of sales and marketing, Jens Quiram, shares how the firm is managing the change and its recommendations for a smooth transition.
Eurex has identified two phases of preparation: phase one concerns the onboarding of new accounts at Eurex, while phase two has to do with testing setups to ensure they work.
Phase one is “almost complete” with momentum building – the firm’s OTC liquidity pool processed average daily cleared volume of €311 billion year-to-date, representing a 29 per cent year-on-year (YoY) increase, and hosted notional outstanding volume of €41.9 trillion in April, a 22 per cent YoY growth. The firm expects to onboard another 100 to 200 accounts by 24 June.
Last but not least
With phase one close to done, the emphasis is currently on phase two – the testing of setups.
Quiram reminds firms that testing setups should be a two-pronged approach – first, to ensure that they can clear new transactions at Eurex; second, to prepare their infrastructure for moving outstanding transactions to an EU CCP. The first will “involve validation of front, middle, and back-office systems”. Ensuring smooth running of processes is important as the European Securities and Markets Authority (ESMA) would be stress testing these capabilities.
Extra help
Eurex offers mechanisms that may help with the immediate transition, such as CCP Switch and “opportunities for efficiency gains across products along the euro yield curve”. For the latter, Quiram recommends bundling Euro government bond derivatives, Euro short-term interest rate (STIR) products, and over-the-counter (OTC) interest rate swaps (IRS) to unlock margin, capital, and collateral efficiencies.
Additionally, cross-margining could be “one of the most effective tools” for reducing margin costs. Quiram writes, “OTC IRD and STIRs cleared at Eurex will be able to be cross-margined against our other products in the same liquidation group, such as government bond derivatives, credit index futures, and the much-anticipated EU bond futures, when launched in September 2025.”
