On November 13, 2023, HM Treasury issued a call for evidence on the exemption for pension funds from the UK EMIR clearing obligations.

As a reminder, under the European Market Infrastructure Regulation (EMIR), there are mandatory clearing obligations typically requiring cash collateral for certain over-the-counter derivative transactions. In recognition of the challenges these requirements caused for pension funds, an exemption provision was made. This exemption has been extended several times on a temporary basis since it was first introduced in 2012, with the latest exemption due to expire on June 18, 2025.

When the last exemption extension was announced, HM Treasury stated that it would review the exemption ahead of June 2025 to explore a longer-term policy approach.

The call for evidence seeks input from industry stakeholders on the clearing exemption, asking questions relating to the way in which pension funds currently make use of the exemption and, without pre-empting policy direction, how pension funds would be affected were the exemption to expire in June 2025. HM Treasury also seeks evidence on whether the exemption affected the LDI crisis and how the situation may have developed had the exemption not been in place.

The call for evidence closes on January 5, 2024.

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