Benefit at the Home of the Euro Yield Curve
Ensure compliance with the EMIR 3.0 Active Account Requirement (AAR), and at the same time achieve a new level of efficiency: Bundling Euro government bond derivatives, Euro short-term interest rate (STIR) derivatives, OTC traded interest rate derivatives (IRD), and credit index futures at Eurex unlocks margin-, capital- and collateral efficiencies. Tap a new efficiency pool by bringing Euro-denominated fixed income derivatives into the “Home of the Euro Yield Curve”.
Your active account that tackles EMIR 3.0
More changes are underway for EU market participants subject to the clearing obligation. EMIR 3.0 foresees the obligation to maintain an active account for systemically relevant products with an EU CCP, i.e., OTC IRD in euro and zloty, as well as STIR in euro.
After the EU regulators agreed on the new requirement in early 2024, the formal confirmation of the final legislative text took place in fall 2024. After its official publication in the EU Official Journal on 4 December 2024, EMIR 3.0 will automatically enter into force 20 days later, i.e., on 24 December 2024. Six months later, on 24 June 2025, the active account requirement will kick in, allowing ESMA to provide further specifications for the implementation in the meantime. Affected market participants are therefore encouraged to ensure readiness in time. With Eurex Clearing, you can already set up this account, be ahead of the curve, and reap the benefits of an EU-based CCP account.
Active account requirement
Market participants must comply with three sets of key requirements under the new active account regime. Those requirements are specified by ESMA for the implementation in practice. Respective draft regulatory technical standards (RTS) were published on 20 November 2024 for market consultation until 27 January 2025.
Based on the final legislation and the draft RTS, EU market participants subject to the clearing obligation and exceeding the current IRD clearing threshold of 3 bn EUR for the products in scope of the active account regime are expected to comply with the below criteria:
a) Ensuring permanent functionality, incl. IT connectivity, internal processes, legal documentation
To ensure compliance with a), ESMA suggests that affected market participants need to sufficiently document and demonstrate that they have the contractual arrangements supporting the provision of the respective clearing services, that they have the internal policies and procedures to access the respective clearing services, that they have cash and collateral accounts established and provisioned, and that they have set up the IT connectivity.
b) Ensuring systems and resources are in place to clear large volumes or take on large flows from Tier 2 CCPs even at short notice
c) Ensuring that all new trades can be cleared at all times on the EU account
To ensure compliance with b) and c), ESMA suggests that affected market participants need to have internal systems to monitor exposure and internal arrangements to support large flows from Tier 2 CCPs under different scenarios, including the assessment of any legal or operational barriers to this effect. In addition, affected market participants shall appoint at least one staff member to support the functioning of the clearing arrangements at all times and obtain a written certification from the CCP that the firm's account has the operational capacity to withstand a threefold increase in clearing activity.
There is an exemption from the operational criteria for affected market participants that clear 85% of their relevant business in the EU (including from related reporting requirements on compliance). Nevertheless, this exemption does not apply to the representativeness criterion and the subsequent requirements outlined below.
d) Affected market participants need to clear, on an annual average, at least 5 trades in each of the 5 most relevant subcategories in each of the contract classes determined by ESMA during a specific reference period as defined by ESMA. For proportionality, small firms with a notional amount outstanding cleared of >6 and <100 bn EUR shall get a longer reference period compared to large firms with a clearing volume of >100bn EUR.
To comply with d), ESMA provides a proposal for the definition of classes of derivatives in scope of the requirement, the maturity ranges and trade size ranges to determine the subcategories for each of those derivatives classes, the number of the most relevant subcategories in which affected market participants need to clear at least 5 trades each, and how often affected market participants need to be active in this respect depending on their clearing volume.
By determining those key parameters, ESMA suggests a grid through which affected market participants can determine their individual activity requirement per annum based on their individual portfolio and clearing volume:
There is an exemption from the representativeness criterion for affected market participants with a clearing volume of up to 6 bn EUR notional amount outstanding cleared (including from the related reporting requirements on compliance). Nevertheless, this exemption does not apply to the operational criteria and subsequent requirements, which means that all market participants subject to the active account regime still need to maintain an operational account with an EU CCP even if they are carved out from the representativeness requirement.
Further, there is a relief for affected market participants to clear 1 trade instead of 5 trades per subcategory, in case the required activity would amount to >50% of their total trades in the previous 12 months.
This regime is underpinned by monitoring and enforcement mechanisms such as the requirement for affected market participants to report every 6 months to their competent authority their level of activity and risk exposure as well as their compliance with the above criteria. In addition, compliance with the criteria shall be stress-tested regularly and new penalty payments are added to the existing supervisory toolbox to sanction non-compliance, if needed. Therefore, both the reporting requirements and the stress testing provisions are also specified by the above-mentioned ESMA RTS. For reporting the activity under the representativeness criterion, in particular, ESMA also announced that they would to provide further guidance to facilitate market participants' compliance. Generally, EMIR 3.0 foresees that the reported information will be shared with ESMA and the new Joint Monitoring Mechanism on EU level to monitor the effectiveness of the regime together with the national competent authorities.
What happens until application?
Following the market consultation, ESMA will have to finalize the RTS and submit them to the European Commission and EU lawmakers within 6 months of entry into force of EMIR 3.0 for endorsement, i.e., towards the end of June 2025. Once endorsed, the RTS will become effective. However, regardless of the availability of the final RTS, the industry already needs to ensure compliance with the active account requirement by 24 June 2025, i.e., at the end of the 6-month transition period following entry into force of EMIR 3.0.
To prepare accordingly in the meantime and ensure compliance in time, the draft RTS may nevertheless already serve as a baseline scenario, and firms are well advised to closely align with their relevant National Competent Authority (NCA) on the implementation of the active account regime until the final RTS are in force.
Achieve a new level of efficiency
Activate your account at Eurex, the Home of the Euro Yield Curve, and unlock unique margin-, capital-, and collateral efficiencies by combining government bond futures, OTC IRD, STIR and credit index futures. At Eurex, OTC IRD and STIRs can be cross-margined with all other products within the same liquidation group. Cross-margining is a powerful tool to reduce margin costs. Clearing repo transactions at Eurex also offers significant funding and financing benefits. Eurex’s integrated cleared repo setup enables participants to manage their collateral and liquidity needs more effectively.
Benefit from support programs
Eurex offers mechanisms to help smoothly transition to EMIR 3.0 compliance, such as the CCP Switch Incentive Program that lets clients get a 100% discount on regular booking fees for OTC IRD transactions on individually selected switch days until 31 December 2025. With the OTC IRD AAR Incentive Scheme clients can get a rebate on their Q4 2025 transaction fees: Program participants will have all OTC IRD transaction fees from 3 June to 30 September 2025 credited back, with the credit automatically offsetting their Q4 2025 OTC IRD fees. Eligible are client clearing accounts that have not cleared more than five OTC IRD transactions between 1 May 2024 and 29 May 2025 as well as accounts onboarded after 29 May 2025.
Take advantage of these opportunities to optimize your portfolios while staying ahead of regulatory demands. Review your current setup and the steps needed to unlock these benefits:
Onboarding and readiness: key considerations
Capacity considerations:
Legal resource
The client and the clearing broker will both need to assign legal resources to negotiate and review the clearing agreement.
Capacity considerations:
Account setup
Accounts will be required with the clearing broker and on behalf of the client at Eurex Clearing. If the client demands CCP reporting, additional lead time will be needed.
The middleware static data setup and technology layer implementation will also be needed.
Activation: key considerations
Capacity considerations:
Setting up and testing the trade execution and clearing workflow (which may require the brokers’ and the clearing brokers' support) will be required. In addition, considerations need to include a full front-to-back review of the cleared workflow.
Trading workflow setup
Client cleared workflow setup
Capacity considerations:
Considerations should include optimizing collateral and margin requirements to maintain an active account with an EU CCP.
Client workflow setup - multi-CCP/multi-clearing broker
Growing together
Eurex has set up partnership programs designed to further accelerate the development of liquid, EU-based alternatives for clearing OTC IRD and STIR derivatives. Both market-led initiatives, the OTC IRD and the STIR partnership program, benefit clients and the broader marketplace through greater choice and competition, improved price transparency and reduced concentration risk.
FIC Derivatives & Repo Sales
