Capital markets union: Council adopts updated rules for financial derivative products and clearing


The EU will soon have in place simplified rules for non-financial counterparties, small financial counterparties and pension funds using financial derivative products.

The Council today adopted a regulation improving the existing regulatory framework applying to the over-the-counter (OTC) derivative market.

The European Market Infrastructure Regulation (EMIR), adopted in 2012, forms part of the European regulatory response to the financial crisis, and specifically addresses the problems encountered in the functioning of the OTC derivatives market during the 2007-2008 financial crisis.

The regulation adopted by ministers today amends and simplifies EMIR to address disproportionate compliance costs, transparency issues and insufficient access to clearing for certain counterparties.

In particular, it introduces a new category of “small financial counterparties” which will be exempted from the obligation to clear their transactions through a central counterparty (CCP), while remaining subject to risk mitigation obligations. Smaller non-financial counterparties will also have reduced clearing obligations. In addition, the text extends by another two years (further extendable twice by an additional year) the temporary exemption from the clearing obligation of pension scheme arrangements.

The updated rules also streamline the existing reporting obligations in order to improve the quality of the data reported, make the supervision more effective and increase access to clearing by removing existing unnecessary obstacles.

Next steps:

The regulation will be signed in the week of 20 May will enter into force 20 days after its publication in the Official Journal.

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