Activity

Here’s an overview of EMIR 3 and its primary focus, incorporating the details you’ve provided:
Regulation (EU) 2024/2987 (“EMIR 3”) and EU Directive: Key Focus
* Entry into Force: EMIR 3 and its corresponding EU directive officially came into force on December 24, 2024.
* Phased Application: While many provisions became effective immediately, it’s important to note that certain limited provisions do not apply until further technical standards (RTS) are published and enter into force.
* For example, the Active Account Requirement (AAR), a cornerstone of EMIR 3, has a compliance deadline of June 25, 2025, for in-scope entities to establish an active account with an EU CCP. ESMA was tasked with publishing draft technical standards for the AAR by June 25, 2025.
* Similarly, new methodologies for clearing thresholds will only apply once Level 2 technical standards relating to these thresholds come into force, which ESMA is consulting on, with a consultation closing date of June 16, 2025, and final report and draft technical standards submission to the European Commission by the end of 2025.
Core Objective: Reducing Over-reliance on Non-EU CCPs
* Perceived Over-reliance: A central driver behind EMIR 3 is the EU regulators’ perception of an over-reliance by EU derivative market participants on non-EU central clearing counterparties (CCPs), particularly UK CCPs, for clearing derivative transactions. This concern stems from financial stability risks and the desire for greater strategic autonomy over critical financial infrastructure post-Brexit.
* Addressing Systemic Risk: The EU aims to mitigate systemic risks associated with a significant volume of euro-denominated derivatives clearing taking place outside its direct oversight.
Acknowledging Market Realities and Transition Period
* Continued UK CCP Access (Until at least June 2028): The EU authorities have pragmatically recognized that the European market for derivatives clearing remains heavily dependent on UK-based clearing houses, such as LCH. To avoid market disruption and allow for a managed transition, EU derivatives users have been permitted to continue to clear through UK CCPs until at least June 2028. This extension of temporary equivalence for UK CCPs was put in place to provide time for EMIR 3 measures to take effect and for EU clearing capacity to develop.
In essence, EMIR 3 represents a strategic move by the EU to bolster its domestic clearing capabilities and reduce its systemic exposure to third-country CCPs, while acknowledging the current market landscape and providing a transition period for market participants.

Video courtesy of ABN-AMRO

Video courtesy of ABN-AMRO