European Commission: Central clearing requirements: pension funds to benefit from further exemption

20 December 2016

The Commission is further extending transitional relief for Pension Scheme Arrangements (PSAs) from central clearing for their over-the-counter (OTC) derivative transactions until 16 August 2018.

PSAs – which encompass all categories of pension funds – are active participants in the OTC derivatives markets in many Member States. However, without such extension, PSAs would have to source cash for central clearing. Since PSAs hold neither significant amounts of cash nor highly liquid assets, imposing central clearing requirements on them would require very far-reaching and costly changes to their business model which could ultimately affect pensioners' income.  The Commission concluded that central counterparties (CCPs) need this additional time to find solutions for pension funds. Today's decision takes the form of a Delegated Act under the European Market Infrastructure Regulation (EMIR). It is the second time that the Commission makes use of its power under EMIR to extend the temporary clearing exemption for PSAs. The upcoming targeted review of EMIR, announced under the Commission's 2017 work programme as a REFIT initiative, will provide an in-depth opportunity to assess this issue.

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