Activity

Disclosure Obligations for Clearing Members and Service Providers:
EMIR 3 explicitly mandates that:
* Clearing members (who connect directly to CCPs)
* Firms that provide clearing services (which might include indirect clearing models where a firm acts as an intermediary for clients, even if not a direct clearing member itself)
Must inform their clients that derivative contracts may be cleared through an EU CCP. This is a significant step towards raising awareness and ensuring clients are fully cognizant of the options available within the EU.
Transparency on Fees and Charges:
* The requirement for rules on the disclosure of fees and charges for clearing through EU CCPs to be set out in technical standards is essential. This aims to:
* Increase transparency: Clients will have a clearer understanding of the costs associated with clearing at different CCPs (EU vs. non-EU) and through different clearing members.
* Facilitate comparison: Better disclosure of fees will enable corporates and other market participants to compare the cost-effectiveness and overall value proposition of clearing through EU CCPs versus non-EU CCPs.
* Promote competition: By making pricing more transparent, it can foster greater competition among clearing service providers and CCPs, potentially leading to more favorable terms for clients.
Key Takeaway for Corporates:
Your concluding point is vital: Corporates should ensure that they are aware of the full suite of options available to them when it comes to clearing derivative trades, particularly those that are mandated to clear.
Here’s why this is so important, especially in light of EMIR 3:
* Compliance with AAR (if applicable): For FC+ and NFC+ entities in scope of the Active Account Requirement, understanding how to meet the “representative number” of trades obligation at an EU CCP is paramount. This includes establishing the necessary accounts and internal processes.
* Strategic Choices: Even if not immediately subject to the AAR, all EU corporates using cleared derivatives should evaluate their clearing strategy. This involves:
* Understanding the landscape: Being aware of which EU CCPs offer clearing for the derivatives they trade.
* Assessing service providers: Discussing options with their clearing members/service providers regarding access to EU CCPs, associated costs, and operational implications.
* Considering future shifts: Recognizing the EU’s long-term objective to bring more clearing into the Union and proactively adapting their clearing arrangements to align with this trend, particularly as the June 2028 UK CCP equivalence date approaches.
* Cost and Efficiency: Transparent fee disclosures will empower corporates to make more informed decisions about where to clear their derivatives to optimize costs and operational efficiency.
* Risk Management: Diversifying clearing venues, where appropriate, can also be a component of a robust risk management strategy.
In essence, EMIR 3 is driving a push for greater transparency and choice in derivatives clearing, and corporates should actively engage with their clearing providers to leverage this newfound clarity and ensure their clearing arrangements are robust and future-proofed.

Video courtesy of KDPW

Video courtesy of KDPW