The EU Council has adopted a new regulation, amending the European Market Infrastructure Regulation (648/2012), that will address the transparency issues, insufficient access to clearing and disproportionate complicated costs that small financial counterparties and pension funds have been subject to in using financial derivative products. The regulation was approved by the European Parliament in February.
In particular, the regulation will:
- create a new category of “small financial counterparties”, that will be exempted from obligations to clear transactions through a CCP, while subject to risk mitigation;
- smaller non-financial counterparties also have reduced clearing obligations;
- extend the temporary exemption from the clearing obligation for pension scheme arrangements by a further two years; and
- streamline existing reporting obligates to improve data.
The regulation will enter force 20 days after its entry into the Official Journal.