Your active account that tackles EMIR 3.0
More changes are underway for EU market participants subject to the clearing obligation. EMIR 3.0 foresees the obligation to maintain an active account for systemically relevant products with an EU CCP, i.e., OTC IRD in euro and zloty as well as STIR in euro.
After the EU regulators agreed on the new requirement in early 2024, the formal confirmation of the final legislative text took place in Q4 2024. 20 days after its official publication in the EU Official Journal, EMIR 3.0 will then enter into force. Six months later, i.e., likely by the end of Q2 2025 (May - June 2025), the active account requirement will kick in, allowing ESMA to provide further specifications for the implementation in the meantime. Affected market participants are therefore encouraged to ensure readiness in time. With Eurex Clearing, you can already set up this account, be ahead of the curve, and reap the benefits of an EU-based CCP account.
Did you know…?
There are two sets of requirements under the new active account regime that market participants need to comply with. While those requirements will be further specified by ESMA for the implementation in practice and respective draft regulatory technical standards (RTS) have been published for market consultation until 27 January 2025, the legislative text already outlines key metrics:
Operational criteria
a) Ensuring permanent functionality, incl. IT connectivity, internal processes, legal documentation.
b) Ensuring systems and resources are in place to clear large volumes or take on large flows from Tier 2 CCPs even at short notice.
c) Ensuring that all new business can be cleared at all times.
Exemption for firms that clear 85% of their relevant business in the EU.
Representativeness criterion
d) Firms need to clear, on annual average, at least 5 trades in each of the 5 most relevant subcategories in each of the 3 contract classes as determined by ESMA during a specific reference period as defined by ESMA.
Exemption for firms <6 bn EUR notional clearing volume outstanding.
On 20 November 2024, ESMA published the draft Consultation Paper on RTS for the conditions of the active account requirement. A summary of the key components suggested by ESMA’s draft RTS will be provided on this website soon.
Following the market consultation, ESMA will finalize the RTS and submit them to the European Commission and EU lawmakers within 6 months of entry into force of EMIR 3.0 for endorsement. Once endorsed, the RTS will become effective. Regardless of the final steps around the RTS, however, the active account regime will already have to be implemented likely by the end of Q2 2025 (May - June 2025). To prepare accordingly in the meantime and ensure compliance in time, the draft RTS may serve as a baseline scenario and firms are well advised to align with their relevant competent authority on the implementation until the final standards are in force.
Are you ready?
The onboarding timeline for your active account under EMIR 3.0 depends on various internal and external factors. Therefore, Eurex Clearing encourages market participants to use the time until the active account regime will be finally effective to prepare swiftly and to avoid onboarding capacity constraints closer to this deadline. Check your status and which capacities to consider in meeting the new EMIR requirement in time:
Onboarding and readiness: capacity considerations
Capacity considerations:
Legal resource
The client and the clearing broker will both need to assign legal resources to negotiate and review the clearing agreement.
Capacity considerations:
Account setup
Accounts will be required with the clearing broker and on behalf of the client at Eurex Clearing. If the client demands CCP reporting, additional lead time will be needed.
The middleware static data setup and technology layer implementation will also be needed.
Activation: capacity considerations
Capacity considerations:
Setting up and testing the trade execution and clearing workflow (which may require the brokers’ and the clearing brokers' support) will be required. In addition, considerations need to include a full front-to-back review of the cleared workflow.
Trading workflow setup
Client cleared workflow setup
Capacity considerations:
Considerations should include optimizing collateral and margin requirements to maintain an active account with an EU CCP.
Client workflow setup - multi-CCP/multi-clearing broker
Growing together
Eurex has set up partnership programs designed to further accelerate the development of liquid, EU-based alternatives for clearing OTC IRD and STIR derivatives. Both market-led initiatives, the OTC IRD and the STIR partnership program, benefit clients and the broader marketplace through greater choice and competition, improved price transparency and reduced concentration risk.
FIC Derivatives & Repo Sales
