Scope:

Evaluation of Regulation (EU) No 648/2018

Evaluation findings:

On the effectiveness and efficiency of the core requirements of EMIR, the evaluation indicates that:

i) the volume of reported trades has improved,

ii) the use of central clearing has increased and

iii) the introduction of risk-mitigation techniques and margin requirements for uncleared trades has been completed,

The evaluation findings however, suggest that:

(i) the reporting requirement applying to transactions may be simplified to increase transparency in the OTC derivatives market.

(ii) obstacles to access central clearing, affecting in particular smaller counterparties, may limit the effectiveness of the clearing obligation.

(iii) EMIR may impose in certain areas disproportionate costs/burdens for certain counterparties that sit on the periphery of the derivatives trading network (e.g. small financials and NFCs). The asymmetric distribution of the derivatives market amongst counterparties, with smaller counterparties accounting for a limited share of the OTC derivative transactions, suggests that such adjustments, while making EMIR more proportionate, would not affect financial stability.

In terms of coherence, EMIR is aligned with international efforts to reform the global OTC derivatives market. At an internal level, EMIR is coherent with other pieces of EU legislation, as outlined in the follow-up to the Commission's Call for Evidence on financial services, in the Commission's proposed amendment to the Capital Requirement Regulation, and in the proposal for a recovery and resolution framework for central counterparties (CCPs). In terms of the EU added value, EMIR covered a gap that existed in legislation by introducing a new framework aiming to address in a uniform process at EU level the lack of transparency of the OTC derivatives market and the related systemic risks.

Which objective(s) does the Commission pursue?

The proposed amendments provide simpler and more proportionate rules for over-the-counter derivatives to reduce costs and regulatory burdens for market participants without compromising financial stability. More specifically, the proposal aims to i) better calibrate the application of certain requirements to specific actors, notably to non-financial counterparties, pension funds and small financial counterparties, ii) remove obstacles to central clearing and iii) simplify reporting requirements and enhance the quality of data.

The proposal also ensures that EMIR objectives are met in a more effective and efficient way without putting financial stability at risk, thereby contributing to the creation of a Capital Markets Union (CMU) and to the Investment Plan for Europe and of the Commission's Growth and Jobs Agenda. Efficient and resilient post-trading systems and collateral markets are essential elements for a well-functioning CMU.

Estimated savings and benefits

Cost savings of up to EUR 2.66 billion in operational costs and up to EUR 6.9 billion in one-off costs are estimated for market participants, and in particular for corporates such as energy companies or manufacturers.

Outcome of legislative procedure

The revision Refit has brought increased proportionality and efficiency on the application of rules aiming at achieving EMIR’s objectives of reducing risks and increasing transparency in derivative markets. In particular, the scope of financial entities subject to the clearing obligation has been reviewed so that it applies to market players with higher volumes of trading activity in derivative contracts. Furthermore, the reporting burden of non-financial counterparties has been alleviated by transfering the reporting responsibility to their financial counterparties.