The European Union’s latest overhaul of derivatives regulation, EMIR 3, introduces a series of structural changes to the cleared OTC derivatives space. Although the widely discussed “active account” requirement will be covered separately, the current reforms already mark a significant shift for market participants, argues global law firm A&O Shearman in a recently published article on Mondaq.
Financial counterparties (FCs) must now carry out two separate calculations, uncleared and aggregate positions, to assess clearing obligations. Non-financial counterparties (NFCs) only need to assess uncleared positions, with certain group-level transactions excluded. These changes will take effect following the finalisation of related technical standards, likely no earlier than 2026.
Clearing members operating at both EU and non-EU CCPs face new reporting and disclosure obligations. These include notifying clients about EU clearing options and providing detailed breakdowns of fees and margin model scenarios. NFCs face tighter rules for becoming clearing members and are limited to offering client clearing only within their own group.
Expanded clearing exemptions
New exemptions apply to trades with non-EU pension schemes and certain post-trade risk reduction services. The cross-border intragroup exemption has also been revised. On the CCP side, procedures for product launches and margin model changes are streamlined, and CCPs must now assist clearing members in meeting enhanced transparency requirements.
