• Simpler clearing rules without putting financial stability at risk
  • Distinct clearing thresholds could be developed by ESMA
  • Pension funds temporarily exempt from clearing obligation

Committee MEPs agreed to simplify clearing rules for small and non-financial counterparties and to temporary exempt pension funds from clearing, in a vote on Wednesday.

Current rules on over-the-counter derivatives (OTCs), clearing houses (CCPs) and trade repositories require that information on OTC derivative contracts is reported to 'trade repositories' and accessible to supervisory authorities. OTC derivative contracts need to be cleared through CCPs, reducing counterparty credit risk, i.e. the risk that one party to the contract defaults.

Excluded entities

Economic and Monetary Affairs Committee MEPs agreed with the Commission’s proposal to ease the burden for small financial counterparties (SFCs). SFC should be released from the clearing obligation when the volume of OTC derivatives they deal with is too low to present an important systemic risk to the financial system and too low for central clearing to be economically viable.

Similarly, non-financial counterparties, which are less interconnected and often active in only one class of OCT derivative presenting therefore have less of a systemic risk, should be subject to the clearing obligation only when they exceed the clearing threshold.

MEPs also agreed that the financial counterparty is solely responsible for reporting on OTC derivative contracts entered into with a non-financial counterparty that is not subject to the clearing obligation.

Furthermore, transactions between affiliates within the group where at least one of the counterparties is a non-financial counterparty should be exempt from the reporting obligation, regardless of the place of establishment of the non-financial counterparty.

Clearing thresholds

ESMA should develop distinct clearing thresholds for financial and non-financial counterparties, taking into account the interconnectedness of financial counterparties and their higher systemic risk, said MEPs.


They also agreed that such thresholds should be regularly updated, in consideration of developments across financial markets and with a view to keeping clearing as the main route for trades in derivatives.

Exemption for pension scheme arrangements (PSAs) from the clearing obligation

MEPs agreed that PSAs and other relevant stakeholders, such as CCPs and clearing members, should accelerate their work on developing viable solutions that enable participation in central clearing. As no solution has been developed so far, temporary derogation from the mandatory clearing of derivatives should be extended to apply for a further two years for a large majority of PSAs (which could be extended by one further year) and for three years for small PSAs (which could be extended by two further years), as those do not present the same risks as the larger ones.




Werner Langen (EPP, DE), the rapporteur, said: “Parliament supports the Commission's reform proposals and goes further on a number of points on the basis of experience to date.


EMIR Refit improves the 2012 rules and thus the entire system with regard to risk provisioning, cutting red tape and reporting obligations, especially for non-financial counterparties and thus creates more security in the financial market.


The risk assessment of pension funds, which has not yet been regulated, will for the first time be tackled by Parliament - as well as by the Commission - in a strict timetable, so that existing risks can be reduced through its own regulation.”


Next steps


The draft report adopted with 46 votes to 5 with 4 abstentions will be confirmed by the Plenary during one of the upcoming sessions (in May II or in June).