Clearing obligation and risk mitigation techniques under EMIR (2024)

EMIR introduces the obligation to clear certain classes of OTC derivatives in CCPs that have been authorised (for European CCPs) or recognised (for non-EU CCPs) under the EMIR framework.

EMIR foresees two possible processes for the identification of the relevant classes of OTC derivatives:

1. The “bottom-up” approach described in EMIR Article 5(2), according to which the determination of the classes to be subject to the clearing obligation will be done based on the classes which are already cleared by authorised or recognised CCPs.
2. The “top-down” approach described in EMIR Article 5(3), according to which ESMA will on its own initiative identify classes which should be subject to the clearing obligation but for which no CCP has yet received authorisation.

In accordance with the clearing obligation procedure and the EC mandate, ESMA shall develop and submit to the EC for endorsem*nt draft regulatory technical standards (RTS) specifying:

• the class of OTC derivatives that should be subject to the clearing obligation;
• the date or dates from which the clearing obligation takes effect,including any phase in and the categories of counterparties to which the obligation applies.

The clearing obligation procedurestarted in Q1 2014 following the firstEU CCPs authorisations. Since then, ESMA has analysed several classes of interest rate, credit, equity and foreign-exchange OTC derivatives and proposed some of them for the clearing obligation.

The table below provides an overview of the current status of the clearing obligation process for those classes.

ThePublic Register for the Clearing Obligationincludes the classes of OTC derivatives that CCPs are authorised to clear, and the OTC derivatives subject to the clearing obligation.