EMIR 3 Published in the Official Journal of the European Union

Regulation 2024/2987 of the European Parliament and of the Council amending Regulations (EU) No 648/2012, (EU) No 575/2013, and (EU) 2017/1131, as regards measures to mitigate excessive exposures to third-country central counterparties and improve the efficiency of Union clearing markets ("EMIR 3"), will enter into force on December 24, 2024 for most of the provisions. 

A fundamental change relates to the active account requirement ("AAR"), which requires the clearing of interest rate derivatives denominated in euro or Polish zloty and euro-denominated short-term interest rate derivatives ("In-Scope Transactions") through EU-authorized central counterparties ("EU-CCP"). Under this requirement, counterparties (whether financial counterparties ("FCs") or non-financial counterparties ("NFCs")) whose In-Scope Transactions exceed the applicable clearing threshold will have to clear a minimum number of In-Scope Transactions through a permanently functional active account at an EU-CCP. On November 20, 2024, the European Securities and Markets Authority ("ESMA") published a draft RTS specifying the conditions of the AAR, including the "representativeness" criteria (e.g., relevant In-Scope Transactions classes and subclasses, reference periods). 

EMIR 3 also introduces other changes relating to OTC derivatives, notably: 

• The inclusion in the EMIR level 1 regulation of the exemption to the margining requirements for uncleared single stock options and equity index options, which becomes permanent;
• Changes to the conditions to benefit from exemptions for intragroup transactions with a non-EU counterparty. Such exemptions no longer require an equivalence decision, and should be available to non-EU counterparties not located in a high-risk or non-cooperative country or other countries specifically designated as not eligible for the exemptions, where such countries appear in a list issued by the Commission or the Council; 
• Change to the clearing thresholds calculation methodology. FCs will have to calculate both their uncleared positions on the one hand, and their cleared and uncleared positions on the other hand, to determine whether they exceed the relevant clearing thresholds. NFCs will be required to only calculate their uncleared positions, with hedging transactions remaining excluded from such calculation. These provisions will start applying from the date of entry into force of further RTS, which may specify new clearing thresholds; and
• OTC derivatives initiated and concluded as the result of a post-trade risk reduction exercise (such as portfolio compression) shall not be subject to the clearing obligations, subject to conditions to be specified in further RTS.