Consultation Paper no.6 on the Clearing Obligation under EMIR


A very long paper which in short asks: Should the exemptions from the Clearing Obligation for a third-country entity which is part of a consolidated group based in the EU, be extended? The answer is almost certainly Yes, but I'll allow you to submit your own feedback.


  • 9. A Recital present in the three Commission Delegated Regulations on the clearing obligation (Recital 12 of Commission Delegated Regulation (EU) 2015/2205, Recital 11 of Commission Delegated Regulation (EU) 2016/592 and Recital 12 of Commission Delegated Regulations (EU) 2016/1178) provides the rationale for this temporary exemption:
    • For OTC derivative contracts concluded between a counterparty established in a third country and another counterparty established in the Union belonging to the same group and which are included in the same consolidation on a full basis and are subject to an appropriate centralised risk evaluation, measurement and control procedures, a deferred date of application of the clearing obligation should be provided. The deferred application should ensure that those contracts are not subject to the clearing obligation for a limited period of time in the absence of implementing acts pursuant to Article 13(2) of Regulation (EU) No 648/2012 covering the OTC derivative contracts set out in the Annex to this Regulation and regarding the jurisdiction where the non-Union counterparty is established. Competent authorities should be able to verify in advance that the counterparties concluding those contracts belong to the same group and fulfil the other conditions of intragroup transactions pursuant to Regulation (EU) No 648/2012.
  • 10. The three Commission Delegated Regulations on the clearing obligation entered into force on three different dates, which means that the three year deadline expires on three different dates for each of them:
    • a. 21 December 2018 for the first Commission Delegated Regulation on IRS,
    • b. 9 May 2019 for the Commission Delegated Regulation on CDS, and
    • c. 9 July 2019 for the second Commission Delegated Regulation on IRS.
  • 11. As a result, the temporary exemption will expire in less than a year with regards to the OTC derivative classes covered in all three Commission Delegated Regulation, with the first deadline expiring in only a few months later this year.
  • 12. However, to date, no implementing act on equivalence on legal, supervisory and enforcement framework of a third-country under Article 13(2) of EMIR in respect of the clearing obligation has been adopted.
  • 13. The adoption by the Commission of implementing acts on equivalence under Article 13 establishing that third-countries are considered as having legal, supervisory and enforcement frameworks equivalent to EMIR is required for the exemption to clear derivatives subject to the clearing obligation for intragroup transactions with third-country group entities. As previously mentioned by ESMA, any provision that has an effect equivalent to that of an implementing act on equivalence under Article 13, although limited in time and scope, but without the assessment provided by the examination procedure referred to in Article 13(2), may have unintended consequences with respect to the objectives of EMIR and therefore requires a very careful review.
  • 14. Therefore, in order to find the right balance between the objective of the temporary exemption as explained in the abovementioned recitals (Recital 12 of Commission Delegated Regulations (EU) 2015/2205 and 2016/1178, as well as Recital 11 of Commission Delegated Regulation (EU) 2016/592 provide for a bit more time for intragroup transactions satisfying certain conditions, not to be affected by the clearing obligation in the absence of equivalence decisions so far), and the need to contain the risk of unintended consequences as explained in the previous paragraph, ESMA is proposing to prolong these exemptions for a limited and short period of time only.


All interested stakeholders are invited to respond to this consultation paper. In particular, responses are sought from financial and non-financial counterparties of OTC derivative transactions as well as central counterparties (CCPs) and clearing members.

All contributions received will...





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