On July 11, 2018, ESMA opened a consultation on the exemption from the clearing obligation for intragroup transactions with a third-country group entity. There are three Regulatory Technical Standards made under the European Market Infrastructure Regulation that provide for the clearing obligation of interest rate derivatives and credit derivatives—the RTS on the clearing obligation for IRS denominated in G4 currencies, the RTS on the clearing obligation for IRS denominated in certain other currencies and the RTS on the clearing obligation for CDS. Each of the RTS also exempt intragroup derivative transactions with third-country group entities that meet certain conditions from the clearing obligation where one of the counterparties is a third-country group entity and there is no relevant equivalence decision. An equivalence decision enables parties subject to both the EU and a third country's clearing obligation to only comply with one jurisdiction's requirements.
Each of the RTS sets a different expiry date for the exemption period. These dates are:
- December 21, 2018 in the RTS on the clearing obligation for IRS denominated in G4 currencies (RTS 2015/2205);
- May 9, 2019 in the RTS on the clearing obligation for CDS (RTS 2015/592); and
- July 9, 2019 in the RTS on the clearing obligation for IRS denominated in certain other currencies RTS 2016/1178). Text
Comments on the proposals should be provided by August 30, 2018. ESMA will consider the feedback in finalizing the draft amending RTS for submission to the European Commission.
The consultation paper is available at: https://www.esma.europa.eu/press-news/esma-news/esma-consults-clearing-obligation-under-emir.
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