Shearman & Sterling LLP | FinReg | EU Legislation Extends the Clearing Obligation Exemption for Certain Intragroup Derivatives Transactions
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  • EU Legislation Extends the Clearing Obligation Exemption for Certain Intragroup Derivatives Transactions
    04/29/2019
    A Commission Delegated Regulation extending the exemption from the clearing obligation for intragroup transactions with a third-country group entity has been published in the Official Journal of the European Union. There are currently three sets of Regulatory Technical Standards made under the European Market Infrastructure Regulation that impose the clearing obligation for certain interest rate derivatives and credit derivatives. Each of these three RTS exempts from the clearing obligation certain intragroup derivatives transactions where one of the counterparties is a third-country group entity and there is no relevant equivalence decision in respect of the third country in which it is situated. An equivalence decision would enable parties that are subject to both the EU and a third country's clearing obligation to comply only with one jurisdiction's requirements, but no equivalence decisions have been made to date. Each of the three RTS sets a different expiry date for the intra-group exemption, which fall between December 21, 2018 and July 9, 2019.

    The Delegated Regulation, which is substantively the same as ESMA's final draft submitted to the European Commission in September 2018, amends each of the RTS by extending the exemption period to one unified expiry date of December 21, 2020. The Delegated Regulation enters into force on April 29, 2019 and is directly applicable across the EU.

    View the Delegated Regulation.

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    TOPIC: Derivatives