EU CNCL EMIR Clearing Package

On Dec. 6, EU CNCL reached agreement on improvements to clearing.

  • EU CNCL adopted mandate to start negotiations with EP on review of European market infrastructure regulation and directive to make EU clearing landscape more attractive.
  • EU CNCL's negotiating mandates on EMIR regulation and directive have been set out.
  • These are part of the EC's 2022 Capital Markets Union (CMU) package of proposals.
  • Follows EC Dec. 2022 proposals on clearing, insolvency and listing, see #155735.
  • Background
  • Derivatives play an important role in economy, but bring risks, as demonstrated in 2008 financial crisis, when weaknesses in OTC derivatives markets became evident.
  • In 2012 EU adopted EMIR to increase transparency in the OTC derivatives markets, to mitigate credit risk, as well as to reduce the operational risks that had been noticed.
  • Laid down rules on OTC derivatives, central counterparties (CCPs), trade repositories.
  • EC presented a proposal on Dec. 7, 2022 to review European market infrastructure regulation and the directive in order to make the clearing landscape more attractive.
  • Proposed EMIR review contains legislative measures to improve EU clearing services, streamlining and shortening process, and more consistency to strengthen supervision
  • It requires market participants subject to a clearing obligation to clear a portion of the products, identified by ESMA as systemically important, via active EU CCP accounts.
  • Changes Proposed by EU CNCL
  • EU CNCL ensured that in practice it is feasible for supervisory authorities to apply streamlined supervisory processes, such as authorization and validation procedures.
  • It strengthened role of supervisory frameworks, ensuring an appropriate division of tasks between national authorities establishing coordination at European level.
  • This is, in particular, by establishing a Joint Monitoring Mechanism and providing ESMA with a coordination role in cross-border emergency situations, where action is needed.
  • EU CNCL set a solid active account requirement (AAR) requiring certain financial and non-financial counterparties to have an account at a EU CCP, including operational elements like ability to handle counterparty’s transactions at short notice if need be.
  • A number of requirements have to be fulfilled by these accounts, including for all CCPs above a certain threshold to clear trades in most relevant sub-categories of derivatives of substantial systemic importance, in terms of class of derivative, size and maturity.
  • Feb. 7, 2024 EU CNCL, EP Provisional Agreement
  • On Feb. 7, 2024, EU CNCL, EP announced they had reached a provisional agreement on review of EMIR to make the EU clearing landscape more attractive and resilient.
  • EU CNCL and EP ensured that in practice it is feasible for supervisory authorities to apply streamlined supervisory processes e.g. authorization and validation processes.
  • Provisional agreement strengthens cooperation, coordination and information sharing among supervisors and EU ESMA, ensuring appropriate division of tasks with national authorities, strengthens role of ESMA with coordination role in emergency situations.
  • But provides clarity that ultimate decision-making powers down to national authorities.
  • ESMA will also take the role of co-chair of supervisory colleges, together with relevant national competent authorities, ESMA may request to be involved in on-site exams.
  • Agreement sets solid active account requirement (AAR) to require certain financial and non-financial counterparties to have account at an EU CCP which includes operational elements such as ability to handle counterparty transactions at short notice.
  • Activity elements so that account is effectively used, this is ensured by a number of requirements, joint monitoring mechanism created to keep track of AAR requirement.
  • Largest non-financial counterparties will be monitored re intragroup transactions, agreement ensures reporting of net aggregate positions to national authorities.
  • On same day EU CMSN welcomed the political agreement on the clearing package, said will make EU clearing services more attractive, robust, and preserve financial stability.
  • Provisional agreement is subject to approval by EU CNCL and EP before going through the formal adoption procedure and entering into force.
  • Feb. 15, 2024 Final Compromise Text
  • On Feb. 15, 2024, EU CNCL issued item notes attaching final compromise texts for the regulation and directive; Coreper invited to approve the text of the draft regulation and the draft directive, as set out in documents ST 6344/24 and ST 6346/24.
  • With a view to reaching an agreement at first reading with the European Parliament.
  • Also invited to give to the Chairman of Coreper the mandate to inform the Chair of EP ECON committee that, should the EP adopt the text of the proposal in form as set out in documents 6344/24 and 6346/24, Council would adopt the regulation and directive.
  • Feb. 19, 2024 EU CNCL Letter to EP
  • On Feb. 19, 2024, EU CNCL issued information note attaching offer letter to EP ECON.
  • Apr. 2024 EP Plenary Adoption
  • On Apr. 24, 2024, EP plenary adopted its positions on draft regulation and directive.
  • In Jul. 2024, EBA issued letter requesting technical advice on EMIR act, see #221590.
  • Oct. 2024 EU CNCL Notes
  • On Oct. 28, 2024, EU CNCL issued notes concerning the outcome of EP first reading.
  • Nov. 6, 2024 Final Text for Adoption
  • On Nov. 6, 2024, EU CNCL issued the final text of regulation (PE-CONS 41/24) and directive (PE-CONS 42/24) for adoption; acts in force 20 days after OJ publication.
  • Nov. 8, 2024 Proposed Adoption
  • On Nov. 8, 2024, EU CNCL issued item notes concerning proposed adoption of acts.
  • If Council approves the Parliament's positions, the legislative acts will be adopted.
  • Nov. 19, 2024 EU CNCL Adoption
  • On Nov. 19, 2024, EU CNCL confirmed adoption of new rules for EU clearing services.
  • The new rules aim to make the EU clearing landscape more attractive and resilient, to support the EU’s open strategic autonomy and to preserve the EU’s financial stability.
  • The European Market Infrastructure Regulation (EMIR) lays down rules on over-the-counter (OTC) derivatives, central counterparties (CCPs) and trade repositories.
  • The new rules improve EU clearing services by streamlining and shortening procedures, improving consistency between rules and strengthening CCP supervision.
  • Will contribute to reducing excessive reliance on systemic CCPs in non-EU countries, by requiring market participants to hold active accounts at EU CCPs and clear a representative portion of certain systemic derivative contracts within single market.
  • The revised EMIR regulation and directive will be published in the EU’s Official Journal before entering into force 20 days later.
  • Dec. 2024 Final Adopted Text
  • On Dec. 2, 2024, EU CNCL issued the final adopted texts of regulation and directive.
  • Regulation and directive in force on the 20th day following publication in the EU OJ.
  • Regulation shall apply from the date of entry into force, with the exception of Article 1, points (4) and (9) amending Articles 4a(1), (2) and (3) and Article 10(1), (2) and (3), respectively, of Reg 648/2012, which shall not apply until the date of entry into force of the regulatory technical standards referred to in Article 10(4) of Reg 648/2012, as amended by Article 1, point (9), of this regulation.
  • Member States shall bring into force the laws and regulations necessary to comply with the directive by 18 months from the date of entry into force of the regulation.
  • Dec. 2024 Official Journal
  • On Dec. 4, 2024, EU CNCL issued final Reg 2024/2987 and final Dir 2024/2994 in OJ.
  • Regulation in force on 20th day following that of publication in EU OJ, Dec. 24, 2024.
  • It shall apply from Dec. 24, 2024 with the exception of Article 1, points (4) and (9) amending Articles 4a(1), (2) and (3) and Article 10(1), (2) and (3), respectively, of Reg 648/2012, which shall not apply until the date of entry into force of the regulatory technical standards referred to in Article 10(4) of Reg 648/2012 as amended by Article 1, point (9), of this regulation.

Regulators EP; EU CMSN; EU CNCL
Entity Types B/D; Corp; Depo; IA; Inv Co; OTC
Reference OJ L, 12/4/2024; PR, 12/2/2024; PR, Reg 2024/2987, Dir 2024/2994, PE-CONS 41/1/24 REV 1, PE-CONS 42/1/24 REV 1, 11/27/2024; PR, 11/19/2024; PR, 15043/24, 15050/24, 11/8/2024; PR, PE-CONS 41/24, PE-CONS 42/24, 11/6/2024; PR, 14730/24, 14734/24, 10/28/2024; PR, P9_TA(2024)0348, A9-0398/2023, P9_TA(2024)0349, A9-0399/2023, 4/24/2024; PR, 6717/24, 2/19/2024; PR, 2/15/2024; PR, 6343/24, 6344/24, 6346/24, 2/13/2024; PR 20240205IPR17406, 2/7/2024; PR 12/6/2023; Nt 16193/23, 16194/23, 16195/23, 12/1/2023; COM(2022) 697 final, 2022/0403 (COD), COM(2022) 698 final, 2022/0404 (COD); EMIR Reg 648/2012; CRR Reg 575/2013; MMFR Reg 2017/1131; UCITS Dir 2014/91, Dir 2009/65; CRD Dir 2013/36; IFD Dir 2019/2034; CMU; Citation: PE-CONS 41/24; PE-CONS 42/24; Reg 2024/2987; Dir 2024/2994;
Functions Compliance; Exams; Financial; Legal; Operations; Reporting; Risk; Trading
Countries European Union; Cross-Border
Category
State
Products Clearing; Corporate; Derivatives; Fund Mgt; Issuance/IPO
Regions EMEA
Rule Type Final
Rule Date 12/6/2023
Effective Date 12/24/2024
Rule Id 193923
Linked to Rule :155735
Reg. Last Update 12/4/2024
Report Section EU

Last substantive update on 12/06/2024