Flashnews: Cleared derivatives: extension of exemption and Brexit


On 23rd of November 2020, ESMA published a proposal to amend the 3 delegated regulations detailing the clearing obligations (products concerned, date of entry into force, etc.).

Two main topics are at the origin of this proposal:

  • The temporary clearing exemption for intra-group transactions involving a third-country entity where no equivalence has been recognised between the European Union and the latter:Originally planned to end in 2019, it had already been extended (at the end of 2018). Less than one month before the new deadline (December 21, 2020), the ESMA therefore proposes to maintain this exemption until June 30, 2022. The regulator justifies this proposal by the absence of new equivalences between the EU and third countries.
    It should be noted that for this same type of transaction there is a temporary exemption for bilateral exchanges of margins (when the contract is not subject to the clearing obligation). Again, the proposed new date is June 30, 2022.
  • Transfer into the Union of contracts originally concluded between part of the Union of 27 and part of the UK: ESMA proposes a legislative mechanism that will allow new contracts to benefit from the clearing exemption if the original contract was not subject to the clearing obligation. Strictly limited, this mechanism will only be available for a period of 12 months from the date of application of the text.

This draft is also an opportunity for ESMA to bring the 3 delegated acts into line with EMIR Refit. The regulator thus proposes to eliminate the Minimum remaining maturity, a concept that has become useless since the frontloading requirement has been abandoned.

The European Commission must now take up this proposal and take a decision on its adoption. It is only after this decision is made that the period of non-objection (lasting up to 3 months) by Parliament and the Council will begin. Should the text not be objected then it will be published in the EU Official Journal and enter into force.

Useful links:

02 December 2020: Article CSDR & BREXIT
27 November 2020: Article Uncleared derivatives: Yet another new text proposal
02 November 2020: Article Consultation on AIFMD review is launched
26 October 2020: Article The settlement disciplines regime (CSDR): SDR 2022
29 September 2020: Article EMIR Third country CCPs … and the UK
28 September 2020: Article CMU 2 new action plan
25 September 2020: Article New measures on digital finance
23 September 2020 : Article AIFMD Review: the process is ongoing
03 September 2020 : Article The settlement disciplines regime (CSDR): A likely short-lived date
26 August 2020: Article The settlement disciplines regime (CSDR): A likely short-lived date
28 July 2020: Article CSDR: Could the implementation of the future settlement discipline regime be pushed back by a year?
03 July 2020: Podcast CSDR: Get ready