Hogan Lovells

Key Dates

European Commission published a legislative proposal for a Regulation to amend EMIR, plus a factsheet with Q&As on the proposal on 4 May 2017. 

ESMA statement published on 3 July 2018.


The European Securities and Markets Authority (ESMA) has issued a communication acknowledging the challenges some pension schemes will face when the requirement for them to clear their over-the-counter (OTC) derivatives trades comes into effect on 17 August 2018.  It recognises that a suitable technical solution for the transfer of non-cash collateral as variation margins has not yet been developed. 

ESMA points out that the temporary exemption from the clearance requirement for pension schemes has been extended twice and that EMIR does not currently permit further extension.  However, a proposal from the European Commission to amend EMIR, published on 4 May 2017, includes a further extension of the exemption.

The communication recognises that there is likely to be a timing gap between the expiry of the current exemption and the coming into effect of any further exemption under an amended EMIR.  It points out that neither ESMA nor national regulators have formal power to disapply or postpone the provisions of EMIR, which are directly applicable in Member States.  However, ESMA expects national authorities to enforce applicable legislation in a proportionate manner and not to prioritise their supervisory actions towards entities which are expected to become exempt from the clearing requirements again in a relatively short period.


A new European regulation on over the counter (OTC) derivatives, commonly known as the European Market Infrastructure Regulation (EMIR), has introduced new requirements including an obligation to clear trades through a central counterparty (CPP). A CCP acts as an intermediary between the two parties to the trade, so that each party has a separate contract directly with the CCP. By guaranteeing the performance of both parties' obligations, clearing trades through a CCP reduces credit and counterparty risk.

Currently, to comply with the central clearing obligations pension schemes would have to source cash. The Commission has recognised that pension schemes often do not hold significant amounts of cash or liquid assets, so compliance could be costly and have a negative impact on pensioners' income.

Date Accessed: 03/12/2021