ESMA specifies requirements to facilitate safe use of post-trade risk reduction services

AI summary of the source article

ESMA has published a final report outlining requirements for providers and users of post-trade risk reduction services. Meeting these conditions allows certain OTC derivative transactions to be exempt from the clearing obligation under EMIR 3.

Why it matters

The goal is to facilitate the use of PTRR services and ensure that the exemption is used under the conditions laid down in EMIR 3 and does not lead to the misuse of the clearing obligation, while contributing to safer and more resilient derivatives markets.

Key facts

• ESMA specified conditions for OTC derivative transactions to qualify for clearing obligation exemptions under EMIR 3 using PTRR services.
• The standards define required participant information, exercise procedures, provider controls, record-keeping, and monitoring mechanisms.
• The draft Regulatory Technical Standards will be submitted to the European Commission for endorsement.