EMIR – European Market Infrastructure Regulation

The European Market Infrastructure Regulation (EMIR, Regulation (EU) No 648/2012) is the EU's central regulation for the over-the-counter (OTC) derivatives market. It was enacted in response to the 2008 financial crisis and implements the G20 Pittsburgh commitments of 2009, requiring all standardised OTC derivatives to be centrally cleared, reported to trade repositories and traded on trading platforms.

EMIR establishes three pillars: the clearing obligation for standardised OTC derivatives through authorised central counterparties (CCPs), comprehensive risk mitigation techniques for non-centrally cleared derivatives (including bilateral margining), and the obligation to report all derivative transactions to ESMA-registered trade repositories.

The regulation has been substantially revised several times: through EMIR REFIT (2019/834) to strengthen proportionality and through EMIR 3.0 (2024/2987) to reduce reliance on third-country CCPs and strengthen EU clearing.

The G20 Pittsburgh declaration of September 2009 called for all standardised OTC derivatives to be centrally cleared and reported to trade repositories by end-2012. The European Commission presented the EMIR proposal on 15 September 2010. After negotiations, EMIR was adopted on 4 July 2012 and published in the Official Journal on 27 July 2012 (OJ L 201). The regulation entered into force on 16 August 2012, with clearing and reporting obligations phased in gradually.

On 28 May 2019, EMIR REFIT (Regulation 2019/834) was published in the Official Journal (entry into force: 17 June 2019), strengthening proportionality by introducing the category of 'small financial counterparties' and overhauling reporting obligations. The new reporting requirements in ISO 20022 XML format apply from 29 April 2024 (EU) and 30 September 2024 (UK). On 4 December 2024, EMIR 3.0 (Regulation 2024/2987) was published, entering into force on 24 December 2024 and introducing the active account requirement for EU-based clearing.

EMIR applies to all derivative transactions and the counterparties involved in the EU:

• Financial counterparties (FC): Investment firms, credit institutions, insurance undertakings, UCITS, pension funds, alternative investment funds and their managers
• Non-financial counterparties (NFC): Undertakings established in the EU that enter into derivative contracts; clearing obligation only when clearing thresholds are exceeded (NFC+)
• Small financial counterparties (FC-): Category introduced by EMIR REFIT for FCs below clearing thresholds, exempt from the clearing obligation
• Central counterparties (CCPs): CCPs authorised in the EU and recognised third-country CCPs (Tier 1 and Tier 2)
• Trade repositories (TRs): Entities registered with ESMA for collecting and maintaining derivative data
• Derivative types: All OTC and exchange-traded derivatives, including interest rate, credit, equity, FX and commodity derivatives

• Clearing obligation: Standardised OTC derivatives declared subject to clearing by ESMA (certain interest rate derivatives in EUR, GBP, USD, JPY, SEK, PLN, NOK, and iTraxx Europe Main/Crossover index CDS) must be centrally cleared through authorised CCPs; exemptions for small counterparties and intragroup transactions
• Reporting obligation: All derivative transactions (OTC and exchange-traded) must be reported to an ESMA-registered trade repository on T+1; from 2024 in ISO 20022 XML format
• Risk mitigation for non-cleared derivatives: Timely confirmation, portfolio reconciliation, portfolio compression, dispute resolution procedures and bilateral exchange of initial and variation margin
• CCP authorisation and supervision: Strict requirements on capital, governance, risk management and default procedures; ongoing supervision by national authorities and ESMA
• Active account requirement (EMIR 3.0): Counterparties above the clearing threshold must maintain an active account at an EU CCP and clear a representative portion of their clearing-eligible contracts in three categories there: interest rate derivatives denominated in EUR, interest rate derivatives denominated in PLN, and short-term interest rate derivatives (STIR) denominated in EUR
• Third-country CCP recognition: Two-tier system (Tier 1/Tier 2) for recognition of non-EU CCPs; Tier 2 CCPs are subject to direct ESMA supervision

The entry describes the material scope of the active account requirement only as 'clearing-eligible EUR and PLN interest rate derivatives'. Under EMIR 3.0 (Regulation (EU) 2024/2987, Art. 7a) the scope covers three transaction types: (i) interest rate derivatives denominated in EUR, (ii) interest rate derivatives denominated in PLN, AND (iii) short-term interest rate derivatives (STIR) denominated in EUR. The third category (EUR STIR) is missing.

EMIR had no connections. Linked to MiFID II as derivatives regulation.