EMIR 3.0

The regulatory framework of the European Market Infrastructure Regulation (EMIR) has evolved significantly since its launch in 2012. The Council of the European Union (EU) has adopted new rules for the revision of the Regulation and the Directive on EMIR 3. The aim of this revision is to strengthen clearing services in the EU to make them more attractive and resilient by requiring active accounts in centralized clearing houses (CCPs) in the EU, and to improve oversight and financial stability.

EMIR 3.0

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Executive summary

The EU Council approved the new rules for the revision of the EMIR 3 Regulation and Directive. The EMIR 3.0 regulatory framework introduces important updates aimed at strengthening the safety, transparency and efficiency of  clearing practices in the EU. Key areas of reform include central clearing, post-trade risk reduction (PTRR), validation of initial margin (IM) models, treatment of intra-group transactions, cost transparency and reporting sanctions. These changes aim to improve operational readiness, enhance market stability and ensure compliance, while reducing systemic risk.

The revised Regulation is generally applicable from 24 December 2024. As for the revision of the Directive, Member States must transpose it by June 25, 2026. 

Main Content

The main changes to the EMIR regulatory framework focus on the following areas:

• Centralized Clearing. EMIR 3.0 requires financial counterparties to maintain resilient clearing accounts with EU-authorized CCPs for over-the-counter (OTC) interest rate swaps and short-term interest rate derivatives. Core requirements include operational readiness, representative clearing activity, and biannual reporting of exposures and activities to national competent authorities (NCAs) to ensure transparency and compliance.
• Treatment of PTRR. PTRR services aim to bolster market stability by mitigating counterparty and operational risks. EMIR 3.0 establishes exemption criteria, defines the characteristics of eligible exercises, and tasks ESMA with creating standards to ensure transparency, neutrality, and effective monitoring of PTRR activities.
• Validation of IM models. The Regulation introduces stricter rules for IM models, mandating clear governance frameworks, regular monitoring, and detailed documentation of assumptions, including nonlinear factors. These provisions enhance regulatory oversight, ensuring consistent and effective risk management in the implementation of IM models.
• Treatment of intragroup transactions. EMIR 3.0 revises the treatment of intragroup transactions, which were previously exempt from settlement obligations and margin requirements. Under the new framework, transactions involving counterparties located in high-risk third countries are no longer eligible for these exemptions.
• Cost transparency. The Regulation requires clearing service providers to improve transparency by informing clients about all associated clearing service fees. It also requires the disclosure of the option to clear contracts through a Union CCP, promoting cost awareness and fairness.
• Reporting sanctions. Competent authorities are granted the power to impose administrative penalties or periodic fines on entities that consistently submit reporting with manifest errors. 

Download the technical note on EMIR 3.0.