Recognising the enormous risks posed by the unregulated over-the-counter (OTC) market, the EU has attempted through EMIR to standardise the clearing of derivatives contracts through central counterparties (CCPs) and to impose collateralised settlement of a large part of OTC trading. The progressive implementation of the clearing obligation has shed light on complex and opaque OTC derivatives markets by simplifying the network of counterparties and has reduced their overall systemic risk by independently evaluating counterparty credit risk and ensuring proper collateralisation.

Since entering into force in 2012, EMIR has been reviewed twice with the third review process still ongoing. The first targeted revision of EMIR entered into force in June 2019. The revision mainly contains amendments aiming at ensuring the well-functioning of the regulation and bringing regulatory relief to smaller market participants on reporting and clearing. It notably introduced a minimum threshold for the clearing obligation to provide relief to small financial counterparties.

The second tranche of the review of the EMIR framework was completed in 2020 and relates to the CCP supervision, dealing with both the supervision of EU CCPs and with the authorisation and recognition requirements of third country CCPs. According to the new framework, the ESMA CCP Supervisory Committee is responsible for the assessment and decision on recognition of third country CCPs based on their systemic importance for the EU. In September 2020, the European Commission announced a time-limited and conditional equivalence to UK CCPs to avoid market disruption after the end of the Brexit transition period, while calling on the industry to reduce their exposures and reliance on UK CCPs that are systemically important for the EU.

To this end, the third review process commenced in 2022 with the aim to mitigate excessive exposure to third country CCPs and improve efficiency of EU’s clearing markets. The proposal includes active accounts with the minimum activity requirements at European CCPs. Following a political agreement reached between the co-legislators on the final version of the amendments in February 2024, EMIR 3.0 is pending formal adoption procedure in the European Parliament and the Council. In case introduced quantitative requirements do not achieve intended rebalancing of clearing activities towards the European CCPs, another review process could follow 24 months after the start of the application of EMIR 3.0.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.