Get ready for EMIR 3.0 – market participants should act now

• Mandatory Active Accounts: EMIR 3.0 requires EU market participants to maintain active accounts for systemically relevant products with an EU CCP.
• Key deadlines: EMIR 3.0 enters into force on 24 December 2024, with the active account requirement becoming effective by 24 June 2025.
• Compliance essentials: Participants must meet operational, representativeness, and reporting requirements to ensure compliance.

EMIR 3.0 introduces significant changes for EU market participants subject to the clearing obligation. The new regulation mandates an active account with an EU CCP for OTC IRD in euro and zloty, and STIR in euro.

Following the EU regulators' agreement in early 2024, the final legislative text was confirmed in fall 2024 and EMIR 3.0 will enter into force 20 days after its publication in the EU Official Journal on 4 December, i.e., on 24 December 2024. The active account requirement will take effect six months later, by 24 June 2025. Market participants are encouraged to prepare in advance. Eurex Clearing offers the opportunity to set up this account now, ensuring compliance and benefiting from an EU-based CCP account.

Active Account Requirement

Based on the final legislation and the draft RTS that ESMA recently published for market consultation, EU market participants subject to the clearing obligation and exceeding the current IRD clearing threshold of 3 bn EUR for the products in scope of the active account regime are expected to comply with the below requirements:

1. Operational criteria: Accounts must be fully operational, ensuring permanent functionality, IT connectivity, internal processes, and legal documentation. Systems and resources must be in place to handle large volumes and new business on the EU account.
2. Representativeness criterion: Contracts cleared at a Tier 2 CCP must be represented on the EU account. Participants need to clear at least five trades annually in each of the five most relevant subcategories in each contract classes in a certain reference period as defined by ESMA.
3. Reporting and monitoring: Participants must report their activity as well as compliance with the above criteria at least every six months to their competent authority. Compliance will also be stress-tested regularly, with penalties for non-compliance.

Be ready for implementation

ESMA will finalize the RTS to guide the industry’s implementation and submit them for endorsement within six months of EMIR 3.0's entry into force, towards the end of June 2025. The active account regime must nevertheless already be implemented by the same deadline. To prepare accordingly and ensure compliance in time, the draft RTS may hence serve as a baseline scenario in the meantime. Firms are nevertheless well advised to closely align with their relevant competent authority on the implementation of the active account regime until the final RTS are in force.

Matthias Graulich, Chief Strategy Officer and Member of the Executive Board at Eurex Clearing, concludes: “Eurex Clearing is committed to support market participants in their transition and readiness for EMIR 3.0. We encourage firms to start preparing now to benefit from upgraded margin and funding efficiencies. Our integrated services across the Euro Yield Curve have driven growth in euro-denominated swaps and STIR products. Firms can leverage these benefits to optimize their books and at the same time comply with the new regulatory requirements.”