REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL under Article 85(1) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.
Date: 2016-11-23
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: financial instrument, financial legislation, financial transaction, futures market, market supervision, pension scheme, technical standard

EUROPEAN 
COMMISSION 

Brussels, 23.11.2016  
COM(2016) 857 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

under Article 85(1) of Regulation (EU) No 648/2012 of the European Parliament and of 
the Council of 4 July 2012 on OTC derivatives, central counterparties and trade 
repositories. 

EN 

   EN 

 
 
 
 
  
 
1.  INTRODUCTION 

Regulation  (EU)  No  648/2012  on  OTC  derivatives,  central  counterparties  and  trade 
repositories (EMIR) was published in the Official Journal of the European Union (EU) 
on 27 July 2012, and entered into force on 16 August 2012.  

EMIR  responded  to  the  commitment  by  G20  leaders  in  September  2009  that:  "All 
standardised  OTC  derivatives  contracts  should  be  traded  on  exchanges  or  electronic 
trading  platforms,  where  appropriate,  and  cleared  through  central  counterparties  by 
end-2012 at latest. OTC derivatives contracts should be reported to trade repositories. 
Non-centrally cleared contracts should be subject to higher capital requirements1". 

Many  derivatives  regulators  across  the  globe  have  also  now  transposed  this 
commitment into their legislative frameworks. 

Prior to the financial crisis of 2007, regulators lacked information about activity in the 
derivatives  markets;  this  meant  that  risks  could  remain  unnoticed  until  they 
materialised.  Moreover,  counterparty  credit 
risk  between  OTC  derivative 
counterparties  was  often  unmitigated,  which  could  lead  to  losses  materialising  were 
one counterparty to default prior to fulfilling its obligations. Due to the high volumes 
of  transactions  across  these  markets  and  the  interconnectedness  of  the  markets' 
participants, such losses could pose a broader threat to the financial system. 

EMIR  therefore  seeks  to  promote  transparency  and  standardisation  in  derivatives 
markets  as  well  as  reduce  systemic  risk  through  the  application  of  its  core 
requirements. These are: 

I. 

II. 

III. 

Central clearing of standardised OTC derivative contracts; 

Margin  requirements  for  OTC  derivative  contracts  that  are  not  centrally 
cleared; 

Operational risk mitigation requirements for OTC derivative contracts that are 
not centrally cleared2; 

IV. 

Reporting of all derivative contracts; 

V. 

Requirements for Central Counterparties (CCPs); 

VI. 

Requirements for Trade Repositories. 

In  accordance  with  Article  85(1)  of  EMIR,  the  European  Commission  is  required  to 
review  and  prepare  a  general  report  on  EMIR  which  shall  be  submitted  to  the 

1 http://www.g20.utoronto.ca/2009/2009communique0925.html 

2 Operational risk mitigation requirements refer to requirements under Article 11(1) of EMIR to value, reconcile 
and confirm non-cleared OTC derivatives transactions and to compress and reconcile portfolios. 

2 

 
 
 
 
                                                            
European  Parliament  and  the  Council,  together  with  any  appropriate  proposals.  This 
review will take into account the need to support the European Commission's priority 
of promoting jobs and growth. 

2.  STAKEHOLDER INPUT 

EMIR  applies  to  almost  all  users  of  derivatives3,  including  any  counterparties 
authorised  under  Union  financial  services  frameworks,  non-financial  counterparties 
('NFCs')  established  in  the  Union  as  well  as  CCPs  and  trade  repositories.  As  a 
Regulation, it applies directly in all Member States of the Union. 

In  order  to  gather  stakeholder  input  for  the  purposes  of  the  review,  the  Commission 
conducted  a  public  consultation  on  the  implementation  of  EMIR4.  This  consultation 
took place between 19 May and 13 August 2015 with 172 responses received from a 
broad range of stakeholders across the EU, as well as third countries.  

Additionally,  as  part  of  the  Call  for  Evidence  consultation5  in  the  framework  of  the 
Capital Markets Union initiative which took place between 30 September 2015 and 31 
January 2016, 278 respondents raised claims focused on provisions of EMIR. It was 
decided  to  wait  for  the  input  to  this  initiative  in  order  to  get  a  fair  and  balanced 
representation  of  the  state  of  play  of  EMIR  implementation  and  the  challenges 
encountered,  and  serve  as  an  appropriate  basis  for  a  review  of  EMIR.  A  detailed 
summary  of  the  responses  to  the  consultation  on  the  implementation  of  EMIR  is 
provided in the feedback statement.  

A  number  of  reports  have  also  been  received  from  the  European  Securities  and 
Markets  Authority  (ESMA)  relating  to  various  topics  under  EMIR,  which  the 
Commission has taken into account. 

Finally, as part of the review, specific input was received from certain Union bodies 
and authorities in line with the Commission's mandate to review EMIR under Article 
85(1): 

(a) Members of the ESCB (the European System of Central Banks) assessment of 
the  need  for  any  measure  to  facilitate  the  access  of  CCPs  to  central  bank 
liquidity facilities6: In its assessment the ESCB considers that, while competent 
authorities  should  continue  to  examine  CCPs'  liquidity  risk  management 
frameworks,  no  provisions  for  central  bank  liquidity  access  should  be 
introduced  in  EMIR.  The  ESCB  considers  that  this  could  undermine  central 

3 Certain Union and third country public bodies may be exempted from EMIR, in accordance with Article 1(4). 

4 http://ec.europa.eu/finance/consultations/2015/emir-revision/index_en.htm 

5 http://ec.europa.eu/finance/consultations/2015/financial-regulatory-framework-review/index_en.htm 

6  Report of the ESCB on the need for any measure to facilitate the access of CCPs to central bank liquidity 
facilities  

3 

 
                                                            
bank  independence,  guaranteed  in  Article  130  of  Treaty  of  the  Functioning  of 
the European Union, and create moral hazard on a large scale. The Commission 
agrees with the ESCB's assessment. 

(b)  ESMA  assessment  of  the  systemic  importance  of  the  transactions  of  non-
financial  firms  in  OTC  derivatives  and,  in  particular,  the  impact  of  this 
Regulation  on  the  use  of  OTC  derivatives  by  non-financial  firms7:  ESMA 
concludes  that  the  current  hedging  approach  is  not  capturing  the  most 
significant  market  players.  ESMA  suggests  removing  the  hedging  exemption 
and considering the introduction of only a simple threshold to capture the largest 
market  players  in  terms  of  volumes.  On  the  basis  of  ESMA’s  input,  the 
Commission agrees that for some NFCs the application of the current approach 
under  EMIR  could  be  too  overly  burdensome  considering  that  it  may  not 
reliably  reduce  systemic  risk.  The  nature  of  hedging  activity  is  nonetheless  a 
relevant  factor  when  considering  the  systemic  relevance  of  NFCs  because 
hedging  entities  are  generally  not  highly  leveraged  and  hold  underlying 
offsetting positions to their OTC derivative contracts. 

(c)  ESMA  review  of  the  functioning  of  the  supervisory  framework  for  CCPs, 
including  the  effectiveness  of  supervisory  colleges,  the  respective  voting 
modalities  laid  down  in  Article  19(3),  and  the  role  of  ESMA,  in  particular 
during the authorisation process for CCPs8: ESMA identifies some cases where 
common approaches should be developed, in particular to the application of the 
processes  envisaged  in  Article  15  and  49  of  EMIR.  The  feedback  from  the 
consultation showed that there was a great interest for clarifying the application 
of these articles. Supervisory convergence as well as publicly available criteria 
for  the  application  of  these  articles  will  be  considered  further  by  European 
authorities. 

(d) ESMA and ESRB reports on the efficiency of margining requirements to limit 
procyclicality  and  the  need  to  define  additional  intervention  capacity  in  this 
area9:  Both  authorities  made  suggestions  for  improving  the  treatment  of 
procyclicality.  The  Commission  agrees  with  the  suggestion  to  increase  the 
transparency  of  margin  requirements,  as  this  is  information  that  clearing 
members  need  for  effectively  managing  their  exposures  and  predicting  sudden 
margin  changes,  but  other  changes  would  be  premature  taking  account  of  the 
recent  application  of  existing  margin  and  anti-procyclicality  requirements  and 
the lack of crystallised failure in margin standards since then. 

7 EMIR Review Report no.1 - Review on the use of OTC derivatives by non-financial counterparties 

8 ESMA review of CCP colleges under EMIR  

9 ESRB Report on the efficiency of margining requirements to limit pro-cyclicality and the need to define 
additional intervention capacity in this area, ESMA's EMIR Review Report no.2 - Review on the efficiency of 
margining requirements to limit procyclicality  

4 

 
                                                            
(e)  ESMA  report  on  the  evolution  of  CCP’s  policies  on  collateral  margining  and 
securing  requirements  and  their  adaptation  to  the  specific  activities  and  risk 
profiles of their users10: ESMA concludes that there is, at this stage, no need for 
a  review  of  the  EMIR  provisions  on  collateral  margining  and  securing 
requirements  as  the  Delegated  Regulation  n°153/2013  provides  sufficient 
granularity for these requirements.  

The input from the diverse authorities shows that EMIR's implementation is achieving 
its  original  objectives  to  promote  transparency  and  standardisation  in  derivatives 
markets  as  well  as  reduce  systemic  risk.  This  input  has  been  duly  taken  into 
consideration when drafting this report.  However, the Commission notes that in some 
areas  the  introduction  of  significant  changes  to  EMIR  would  be  premature  taking 
account of the recent application of existing requirements and the absence of failure in 
the application of the relevant standards to date. 

3.  PURPOSE OF THE REPORT 

The Commission is required under 85(1) to produce a report.  

It is important to note that certain  core  requirements  provided  for  under  EMIR  have 
yet  to  be  implemented  or  completed.  In  particular,  at  this  stage  clearing  obligations 
and  margin  requirements  in  respect  of  non-cleared  OTC  derivatives  transactions  are 
not  yet  fully  applicable.  In  this  sense,  it  is  not  possible  at  this  stage  to  review  the 
impact of EMIR comprehensively.  

Nevertheless,  stakeholders  have  identified  a  number  of  issues  relating  to  the 
implementation of those requirements which already apply (namely, reporting to trade 
repositories  and  operational  risk  mitigation  requirements),  as  well  as  issues 
encountered in preparing for the clearing and margin requirements.  

In particular, many stakeholders argue that certain derivatives market participants are 
facing  significant challenges  in  implementing the  requirements such as the reporting 
and  the  clearing  of  some  transactions,  to  an  extent  that  may  be  considered 
disproportionate to the objectives of EMIR and which, in some cases, could have an 
excessive  impact  on  businesses  as  these  requirements  would  be  costly  to  fulfil 
compared to the advantages they bring in terms of market transparency and financial 
stability.  Many  respondents  to  the  public  consultation  illustrated  their  responses  by 
making a comparison to the approaches to regulatory reform that have been taken in 
other jurisdictions. 

This  report  provides  a  summary  of  the  areas  where  consultation  responses  and 
specific  input  received  from  various  authorities  have  shown  that  action  is 

10 EMIR Review Report no.3 - Segregation and portability requirements  

5 

 
 
                                                            
necessary to ensure fulfilment of the objectives of EMIR in a more proportionate, 
efficient and effective manner.  

4.  PRINCIPAL ISSUES IDENTIFIED 

There  is  general  support  for  the  objectives  of  EMIR  of  promoting  transparency  and 
standardisation  in  derivatives  markets  and  reducing  systemic  risk  through  its  core 
requirements.  These  core  requirements  –clearing,  margin  requirements,  reporting, 
operational  risk  mitigation  requirements  and  requirements  for  trade  repositories  and 
CCPs  –  remain  integral  to  achieving  the  objectives  of  EMIR,  and  delivering  on  its 
international commitments for regulatory reform.  

It  is  therefore  considered  that  no  fundamental  change  should  be  made  to  the 
nature  of  the  core  requirements  of  EMIR,  which  are  integral  to  ensuring 
transparency and mitigating systemic risks in the derivatives markets. 

Nonetheless,  a  number  of  areas  were  highlighted  where  the  EMIR  requirements 
could be adjusted without compromising on its overall objectives in order to:  

(i) simplify and increase the efficiency of the requirements; and  

(ii) reduce disproportionate costs and burdens.  

4.1. Simplifying and increasing the efficiency of the requirements 

Respondents,  including  CCPs,  clearing  members,  non-financial  counterparties,  small 
financials  and  pension  funds,  highlighted  a  number  of  requirements  which  could  be 
refined to ensure the smooth functioning of derivatives markets or enable a smoother 
implementation of the requirements by market participants, without compromising on 
the objectives of EMIR or introducing additional regulatory burdens. 

4.1.1. Introducing a mechanism to suspend the clearing obligation   

Both ESMA and the ESRB highlighted the absence of a mechanism under EMIR for 
the  clearing  obligation  to  be  suspended  promptly,  suggesting  that  this  may  be 
necessary to react quickly to dramatic changes in market conditions (e.g. sharp change 
in volumes  cleared or liquidity) and remove or suspend swiftly a clearing obligation 
where  the  market  situation  so  requires.  Several  other  respondents  also  supported  the 
introduction of such a mechanism.  

Clearing  obligations  can  be  amended  or  removed  through  Regulatory  Technical 
Standards  ('RTS')  but  this  process  can  take  several  months.  Furthermore,  there  are 
circumstances  which  could  be  envisaged  where  an  expedited  process  to  suspend  a 
clearing  obligation  may  be  necessary  to  avoid  market  disruption.  The  Commission 
will therefore propose a mechanism for suspending a clearing obligation as part of 
the proposal on the CCP Recovery and Resolution for the purposes of resolution 
and consider the possibility to broaden the scope of the suspension of a clearing 
obligation for other appropriate purposes. 

6 

 
 
 
 
 
4.1.2. Facilitating the predictability of margin requirements.  

Many respondents, notably industry associations and banks noted that, currently, it can 
be difficult to predict the levels of margin that they will be required to post to CCPs 
for centrally cleared transactions. These respondents suggested that better information 
sharing  by  CCPs  to  clearing  members  could  address  this  shortcoming.  Both  ESMA 
and  the  ESRB  in  their  reports  on  procyclicality  and  margining  requirements  also 
called  for  greater  transparency  on  margin  standards  and  procyclicality  requirements. 
Better  information  sharing  could  make  compliance  with  margin  requirements 
more  efficient  for  market  participants  and  enable  them  to  better  manage  their 
own assets. 

Similarly,  with  respect  to  non-cleared  transactions,  some  respondents,  notably 
financial institutions, noted the absence of a clear mandate for initial margin models to 
be endorsed by authorities, which could lead to uncertainty among market participants 
as  to  whether  their  calculations  are  considered  by  authorities  to  be  fully  compliant 
with  regulations.  A  mandate  for  initial  margin  models  to  be  endorsed  by 
authorities could promote certainty for market participants and authorities alike. 

4.1.3. Streamlining Trade Reporting 

The topic of reporting to trade repositories attracted a significant number of responses 
from market participants and authorities. Respondents, primarily industry associations 
and  companies,  but  also  public  authorities,  consultancies,  NGOs,  and  a  trade  union, 
suggested  that,  currently,  many  reports  by  the  two  counterparties  pertaining  to  the 
same  transaction  are  not  accurately  matched  within  trade  repositories.  This  is 
attributed in part to a lack of clarity around what needs to be reported and how, and to 
differences in requirements between trade repositories. Further, respondents suggested 
that  requirements  could  be  simplified  significantly  without  losing  crucial  data,  in 
particular  with  respect  to  exchange  traded  derivatives.  Respondents  also  questioned 
whether,  as  a  result  of  the  difficultly  in  submitting  accurate  data  and  matching,  the 
data  was  as  reliable  and  usable  as  it  should  be.  Finally,  respondents  questioned  the 
utility  of  the  requirement  to  report  transactions  existing  prior  to  the  start  of  the 
application  of  the  reporting  obligation  (so  called  'backloading')  as  this  data  is  very 
challenging to report - it covers derivatives that were concluded before counterparties 
were  in  a  position  to  know  what  information  had  to  be  kept  and  reported  -  and  it  is 
considered  as  less  and  less  useful  as  it  concerns  historical  data  that  is  not  of  critical 
importance for regulators.  

Many  respondents  noted  improvements  that  could  be  made  at  the  level  of  trade 
repositories  to  make  data  aggregation  more  efficient,  notably  through  the  use  of 
common  methodologies  by  Union  trade  repositories.  Further,  ESMA  suggested  that 
fines  for  trade  repositories  may  need  to  be  increased  in  order  to  ensure  effective 
supervision. 

Promoting transparency by streamlining reporting requirements in certain areas 
and  enhancing  the  functioning  of  trade  repositories  is  essential  to  fully  achieve 

7 

 
the  objectives  of  EMIR.  Thus,  it  is  considered  that  further  assessment  of  the 
current rules should be undertaken to take specific actions to achieve that goal. 
This can also help reduce the compliance burden for market participants. 

Further,  certain  third  country  authorities  face  legal  challenges  in  executing  the 
arrangements (i.e. conclusion of an international agreement) currently required under 
EMIR  for  mutual  access  to  data held in trade repositories. Alternative methods for 
providing  access  to  third  country  authorities  of  trade  repositories'  data  that 
provide appropriate safeguards should therefore be explored. 

4.2 Reducing disproportionate costs and burdens 

4.2.1. Scope of transactions 

Responses  pointed  to  a  number  of  areas  where  the  scope  of  transactions  covered  by 
requirements could be considered unnecessary in achieving the objectives of EMIR.  

In particular, it was questioned whether the requirement to clear contracts entered into 
'frontloading')  is 
before  the  clearing  obligation  enters  into  force  (so  called 
proportionate  given  the  limited  number  of  contracts  that  this  will  capture  as  it  is  a 
temporary  measure  by  nature,  balanced  against  the  difficulties  and  uncertainty  of 
applying  clearing  obligations  retrospectively.  Companies  and  industry  associations 
questioned  whether 
to  apply  operational  risk  mitigation 
requirements  to  intragroup  transactions,  given  that  these  transactions  are  undertaken 
within  the  same  corporate  groups  where  coordination  between  the  counterparties  is 
inherent in the nature of the transactions. 

is  proportionate 

it 

It  is  appropriate  to  review  to  what  extent  transactions  entered  into  before  the 
clearing  obligation  enters  into  force  and  intragroup  transactions  should  remain 
in scope of the relevant requirements. 

4.2.2. Scope of entities   

a) Non-Financial Counterparties (NFCs) 

With  respect  to  the  scope  of  counterparties  covered  by  EMIR  requirements, 
respondents noted that non-financial counterparties (NFCs) face significant challenges 
in meeting requirements, in particular reporting requirements, due to limited resources 
and experience. Taking the significance of these challenges into account, many non-
financial counterparties questioned whether such counterparties pose systemic risk to a 
degree  that  justifies  continued  application  of  EMIR  requirements.  Respondents  also 
noted that EMIR appears to be more stringent with respect to NFCs than many similar 
regulatory regimes in third countries.  

Therefore, it is appropriate to assess whether adjustments should be made to the 
scope of core requirements under EMIR in order to address the challenges faced 
by NFCs. 

8 

 
transactions  should  not  be  exempt  from 

Such  adjustments  could  include  removing  legal  obligations  for  NFCs  to  fulfil 
operational  risk  mitigation  requirements  and  simplifying  the  reporting  of  their 
transactions.  However,  such 
these 
requirements entirely in order to preserve the application of the core EMIR objectives 
in  terms  of  financial  stability.  Options  should  be  explored  to  consider  whether  a) 
financial counterparties should report derivatives data on behalf of NFCs, b) financial 
counterparties,  but  not  NFCs,    should  ensure  that  operational  risk  mitigation 
requirements    are  applied  for  transactions  with  NFCS  and  c)  NFCs  should  be 
exempted from reporting their intragroup transactions. 

Additionally,  in  its  report  on  this  topic,  ESMA  provided  new  insights  into  the 
activities of NFCs following the introduction of the EMIR reporting requirements. It is 
apparent  from  ESMA's  findings  that  NFCs  may  be  finding  the  hedging  exemption 
difficult to monitor and apply in practice. This could result in inconsistent regulatory 
treatment  of  NFCs  across  the  Union.  It  is  also  apparent  from  the  data  available  that 
NFCs have a low level of interconnectedness with the financial system as they transact 
with  very  few  counterparties  across  the  markets;  an  average  of  1-2  per  entity 
compared with financial counterparties which have an average of 31 counterparties per 
entity. 

On  the  basis  of  ESMA’s  input,  it  can  be  concluded  that  some  NFCs  are  finding  the 
application  of  the  current  approach  under  EMIR  burdensome  and  that  it  may  not 
substantially reduce systemic risk. However, it is considered that the nature of hedging 
activity  is  nonetheless  a  relevant  factor  when  considering  the  systemic  relevance  of 
NFCs,  as  entities  that  hedge  are  generally  not  highly  leveraged  and  hold  underlying 
offsetting positions to their OTC derivative contracts. 

Therefore,  taking  into  account  the  limited  interconnectedness  of  NFCs  that 
existing data reveals to exist in the financial system, further consideration should 
also  be  given  to  whether  any  NFCs,  or  only  some  of  them  based  on  the  volume 
and  type  of  activity  in  derivatives  markets,  should  be  captured  by  clearing  and 
margin requirements.  

Such  consideration  should  take  into  account  the  fact  that  some  NFCs  may  be 
reclassified when MIFID II is implemented.  

b) Small Financial Counterparties  

In  addition  to  the  difficulties  faced  by  NFCs,  small  financials  and  industry 
associations  and  some  public  authorities  noted  that  when  undertaking  limited 
derivatives activity they were facing significant challenges in establishing the access 
to clearing necessary to meet upcoming clearing obligations. Respondents considered 
this  was  principally  due  to  leverage  ratio  requirements  anticipated  by  clearing 

9 

 
members under the Capital Requirements Regulation11, which are perceived as having 
the  potential  to  make  client  clearing  services  too  costly  for  them  to  offer.  Another 
obstacle  noted  by  respondents  was  a  lack  of  both  flexibility  and  certainty  around 
segregation  and  portability  options.  Respondents  pointed  out  challenges  in  applying 
these  requirements  in  particular  as  they  might  be  difficult  to  implement  in  certain 
Member  States'  due  to  domestic  insolvency  laws.  Finally,  several  respondents 
suggested  that,  even  if  the  obstacles  mentioned  could  be  resolved,  some  small 
financial  counterparties  subject  to  clearing  requirements  undertake  such  limited 
activity  in  OTC  derivatives  that  it  is  not  commercially  viable  for  them  to  establish 
clearing  solutions.  Action  to  address  the  obstacles  to  client  clearing  should  be 
considered. 

c) Pension Scheme Arrangements  

Pension  scheme  arrangements  are  currently  exempt  from  clearing  under  EMIR 
through  a  Commission  Delegated  Regulation12.  This  exemption  will  expire  on  16 
August 2017 at the latest and can be prolonged for one additional year through another 
delegated  act  by  the  European  Commission.  As  described  in  the  Report  from  the 
Commission assessing the progress and effort made by CCPs in developing technical 
solutions  for  the  transfer  by  pension  scheme  arrangements  of  non-cash  collateral  as 
variation  margins,  as  well  as  the  need  for  any  measures  to  facilitate  such  solution13, 
clearing  solutions  for  pension  scheme  arrangements  to  post  non-cash  assets  as 
variation margin are however unlikely to be available in the foreseeable future. Once 
the temporary clearing exemption currently provided for under EMIR expires, pension 
scheme  arrangements  will  be  faced  with  either  (i)  relying  on  repo  markets  for 
collateral  transformation,  or  (ii)  increasing  their  cash  holdings  relative  to  their  non-
cash asset holdings. The first scenario may not provide a robust solution  in times of 
market volatility and a strain on capacity of the repo markets could pose liquidity and 
stability  threats  to  those  markets  more  broadly.  The  second  scenario  would  have  a 
negative  impact  on  retirement  incomes  of  beneficiaries  of  the  pension  scheme 

11 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential 
requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, OJ L 176 
of 27.6.2013 

12 Commission Delegated Regulation (EU) 2015/1515 of 5 June 2015 amending Regulation (EU) No 648/2012 
of the European Parliament and of the Council as regards the extension of the transitional periods related to 
pension scheme arrangements, OJ L 239 of 15.9.2015 

13 Report from the Commission to the European Parliament and the Council under Article 85(2) of Regulation 
(EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central 
counterparties and trade repositories, assessing the progress and effort made by CCPs in developing technical 
solutions for the transfer by pension scheme arrangements of non-cash collateral as variation margins, as well as 
the need for any measures to facilitate such solution (COM(2015)39 final of 3.2.2015) 

10 

 
                                                            
arrangements, estimated by the baseline study14 ordered by the European Commission 
to be up to 3.66% across the EU over 20-40 years15.  

An  assessment  should  be  made  as  to  whether  the  current  exemption  could  be 
prolonged  or  made  permanent  without  compromising  on  EMIR's  objective  of 
reducing systemic risk as pension scheme arrangements would still be subject to 
bilateral  margin  requirements  for  OTC  transactions  that  are  not  centrally 
cleared that mitigate systemic risks. 

5.  CONCLUSIONS 

There  does  not  seem  to  be  a  need  for  fundamental  changes  to  be  made  to  the 
nature  of  the  core  requirements  of  EMIR,  which  are  integral  to  ensuring 
transparency and mitigating systemic risks in the derivatives markets. 

Nevertheless, having analysed the input received as part of the EMIR Review process 
and the Call for Evidence, action should be considered to address the issues identified 
in this report.  

In particular, further assessment is needed in order to determine how to alleviate the 
challenges  identified  to  allow  for  a  streamlined  application  of  EMIR  that  could 
remove  excessive  regulatory  burdens  on  market  participants  and  enable  smoother 
implementation of the requirements, whilst ensuring that the objectives of EMIR are 
nonetheless  fulfilled.  This  process  should  carefully  consider  the  international 
principles in the derivatives markets field in order to ensure an efficient functioning of 
global  markets.  In  addition,  this  initiative  would  support  the  Commission's  Better 
Regulation  agenda  by  eliminating  unnecessary  costs  that  are  currently  carried  by 
companies and that could release funds for investing. 

The Commission will propose a legislative review of EMIR in 2017, in the framework 
of REFIT that will be accompanied by an impact assessment which will considers the 
various issues at stake in more depth. As part of this review the Commission will also 
assess the relevant technical standards linked to EMIR. 

Finally,  the  Commission  is  also  proposing  a  legislation  on  CCP  recovery  and 
resolution  that  deals  with  elements  that  are  not  covered  by  EMIR,  such  as  recovery 
planning, resolution planning, and removing impediments to resolvability for CCPs so 
that their financial distress can be dealt with effectively by authorities without unduly 
creating financial stability or placing public funds at risk.  

14 Baseline report on solutions for the posting of non-cash collateral to central counterparties by pension scheme 
arrangements - 25 July 2014. 

15 ibid. 

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