Under EMIR, clearing members and clients are required to provide clearing services, whether directly or indirectly, under fair, reasonable, non-discriminatory and transparent(FRANDT)commercial terms from 18 June 2021. As empowered by Article 4(3a) ofEMIR,the Commission has adopted a delegated regulationspecifying the conditions under which the commercial terms are to be considered to be FRANDT (the Delegated Regulation) on 2 June 2021. This Delegated Regulationisnow subject to the scrutiny of the European Parliamentand Counciland it will only be published in the Official Journal and enter into force following the completion of this process.

Given that thescrutiny periodis ongoing, it cannot be known when the Delegated Regulationwillbe finalised and start to apply but this will likely occurafter 18 June 2021.There could therefore be a timing gap during which clearing members and clients would need to provide clearing services in accordance withFRANDT commercial termswhile the Delegated Regulationspecifyingthe conditions under which the commercial terms are to be considered to be FRANDT has not entered into force yet.From a legal perspective, neither ESMA nor competent authorities possess any formal power to dis-apply a directly applicable EU legal ruleor delay the start of some of the relatedobligations. Therefore, any change to the application of the EU rules would need to be implemented through EU legislative process. In view of the above, ESMA encourages market participants to anticipate and get ready to comply with the upcoming regulatoryobligations set out in Article 4(3a) of EMIR.

At the same time, ESMA acknowledges the challenges that certain clearing membersand clients may face to prepare andprovide clearing services in accordance withFRANDT commercial termsbefore the DelegatedRegulationhas entered into force.In this respect, ESMA expects competent authorities not to prioritise their supervisory actions towards clearing members and clientsexpected to provide clearing services in accordance with FRANDT commercial termsbefore the date the Delegated Regulationwill apply, and to generally carry outtheir risk-based supervisory powers in their day-to-day enforcement of applicable legislation in this area in a proportionate manner.

ESMA