What is EMIR 3? Is it the same as EMIR Refit?


Regulatory reporting is complex and with the numerous EMIR updates released by ESMA over the years, it can get quite confusing. Recently, the European Commission has published a proposal called EMIR 3. This new proposal might sound like a major update, however it is unrelated to the upcoming (April 2024) EMIR refit changes which affect derivatives trade reporting.

EMIR 3 is primarily aimed at improving the central clearing system in the EU, making EU CCPs more efficient and attractive to market participants. In the past, ESMA released amendments to European Market Infrastructure Regulations (EMIR), known as EMIR 2.2. The main change was the introduction of a new tiering system for third-country Central counterparties (CCPs).

It has become apparent to the European Commission, based on an ESMA report, that market participants tend to be more reliant on third-country CCPs to clear their derivatives outside the EU. The excessive reliance of EU financial markets on UK based CCPs will bring financial instability to the EU. So the European Commission is encouraging market participants that clear derivatives to use an EU CCP. On top of this, EMIR 3 proposes to mandate that counterparties subject to clearing obligations must hold active accounts with EU CCPs and clear with an EU CCP in Article 7a.

The European Commission has proposed that the clearing threshold be calculated differently. Instead of looking at ETD or OTC derivatives (Article 4a), the revised clearing threshold calculation will focus on cleared or uncleared derivatives. This means derivatives not cleared with an EU authorised CCP (Article 14) or non-EU recognised CCP (Article 25) should be considered for calculation.

Once the EMIR 3 proposal is adopted by ESMA, it will come into immediate effect.

If you have further questions on the EMIR 3 proposal, see ESMA’s Q&A.

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