EMIR 3 Active Account Requirement

Background

The European Market Infrastructure Regulation (Regulation (EU) No 648/2012 – EMIR) was introduced after the 2008 financial crisis as part of G20 reforms to reduce systemic risk in derivatives markets.

It mandates that certain standardized OTC derivatives be centrally cleared through central counterparties (CCPs), which manage counterparty risk by stepping in if a party defaults. This obligation applies to financial counterparties and large non-financial ones, with exemptions for intragroup transactions and some pension schemes.

Over time, EMIR’s clearing, reporting, and risk mitigation rules have significantly reshaped the market, with much of the interest rate, credit, and equity derivatives now cleared via CCPs. These infrastructures are heavily regulated to ensure resilience. Despite EMIR, many EU firms continue to clear large volumes through third-country CCPs, especially in the UK, due to their deep liquidity and global reach.

 

Why EMIR 3?

EMIR has been revised over time, including EMIR Refit (2019) and EMIR 2.2 (2020), to address evolving concerns. Brexit was a key trigger for EMIR 3, as UK-based CCPs – clearing large volumes of EUR-denominated derivatives – became third-country entities. This raised EU concerns about over-reliance on non-EU CCPs, limited regulatory oversight, and potential risks to monetary policy.

To address these vulnerabilities, the EU granted temporary equivalence to UK CCPs but emphasized the need for a long-term solution. This equivalence was recently prolonged until 30 June 2028¹.

EMIR 3, proposed in December 2022, aims to strengthen EU CCPs and reduce systemic dependence on UK infrastructures. Its central feature is the Active Account Requirement, intended to shift some EU firms’ clearing activity back to EU CCPs as part of a broader push for financial stability and strategic autonomy.

 

The New Active Account Requirement

EMIR 3 (Regulation (EU) 2024/2987) came into force on 24 December 2024 and with it the Active Account Requirement (AAR) – a pivotal new obligation aimed at reducing excessive exposures to third-country CCPs.

While the regulation is already in force, many of its key obligations are subject to a phased implementation timeline. In-scope counterparties must notify ESMA and their national competent authority immediately upon becoming subject to the AAR, and they have to establish and operationalise an active account at an EU CCP within six months – ie by 25 June 2025 for entities already in scope as of entry into force.

ESMA has until 25 June 2025 to submit draft Regulatory Technical Standards (RTS) to the European Commission, detailing the operational and representativeness conditions under Article 7a. These RTS are expected to become applicable later in 2025, further shaping how firms must comply in practice.

In essence, certain EU counterparties must maintain at least one active clearing account at an EU-authorised CCP and use it to clear a representative portion of their trades. According to the Level 1 text, financial counterparties (FCs) and non-financial counterparties (NFCs) that are subject to EMIR’s clearing obligation (ie those above clearing thresholds) in specified asset classes (interest rate derivatives denominated in EUR or PLN, and short-term interest rate derivatives denominated in EUR) now have to clear at least part of their relevant derivative contracts through an EU CCP via this “active account”.

The AAR is a deliberate push to rebalance EU firms’ clearing: it stops short of banning the use of third-country CCPs (a drastic step that could disrupt markets), but it creates a legal obligation to maintain an EU clearing foothold and to actively use it for a slice of the derivatives portfolio. As one commentator observed, EMIR 3’s active account proposal is central to the post-Brexit EU drive to limit risks to the EU financial system from heavy reliance on UK CCPs².

 

Key elements of the Active Account Requirement

For in-scope clients, the Active Account Requirement introduces several new obligations and definitions that warrant close attention. Article 7a of EMIR (as amended by EMIR 3) lays out the following key elements.

Scope – Who and what is covered

The AAR applies to EU financial and large non-financial counterparties exceeding EMIR clearing thresholds in key derivatives – mainly EUR or PLN interest rate products. It targets those with significant activity in London CCPs. Firms must assess group-wide exposures (excluding intragroup trades) to determine applicability. Once in scope, they must notify authorities and set up an active EU CCP account within six months.

Active account and operational conditions

Firms subject to the AAR must maintain a functional EU CCP clearing account – either directly or through a broker – ready to handle significant trade volumes. Article 7a(3) mandates that the account be legally and technically operational, scalable, and immediately usable. This includes systems readiness, legal arrangements, and trained personnel.

Representativeness obligation

Firms have to clear a representative sample of their trades through the EU account, reflecting the types of contracts cleared at UK CCPs. The baseline is five trades per key subcategory annually, unless this exceeds 50% of total volume, in which case one trade suffices.

Firms with under EUR6 billion in outstanding notional are exempt. Only proprietary trades count – client clearing volumes are excluded – to ensure the focus is on a firm’s own market exposure.

Reporting obligations

Annual stress tests and biannual reporting to regulators have to confirm ongoing operational readiness. In addition, counterparties must report semi-annually on the volume and types of derivatives cleared through their active account, and on their exposure to Tier 2 CCPs, and confirm compliance with the representativeness obligation where applicable.

Exemptions and safe harbours

Firms clearing 85% or more of relevant trades in the EU are exempt from key operational and reporting obligations. Group compliance is allowed, meaning one entity may fulfil the AAR for multiple affiliates, provided coordination ensures thresholds and trade counts are met. Intragroup trades remain exempt, helping corporates with internal hedging avoid undue burden.

 

ESMA’s consultation on Active Account Requirement Conditions

On 20 November 2024, ESMA launched a public consultation to define how the Active Account Requirement (AAR) should work in practice. The consultation focused on operational conditions (eg system readiness, stress-testing) and how to determine whether trades cleared through an EU CCP are “representative” of a firm’s overall activity. It also covered reporting requirements and monitoring by regulators.

The consultation closed on 27 January 2025, and ESMA is expected to submit the final RTS to the European Commission by 25 June 2025.

 

Practical compliance considerations

For sophisticated counterparties caught by the Active Account Requirement, the challenge now is translating these rules into an actionable compliance strategy. Here are several practical observations and steps for firms to consider:

• Assess group-wide clearing activity: Firms must assess group-wide clearing volumes in specified derivatives, including those cleared by non-EU affiliates, to determine if they fall under the AAR. Intragroup trades are excluded, and once thresholds are exceeded, firms have six months to establish an EU active account.
• Leverage group solutions: Groups with multiple entities can centralize compliance by designating one EU entity to fulfil the AAR. This simplifies account setup and improves clearing efficiency, but requires proper legal and operational coordination to route trades and consolidate reporting.
• Establish EU clearing connectivity: Firms not yet clearing in the EU should act promptly to open a fully operational account with an EU CCP. This includes selecting a CCP or broker, completing legal agreements, and ensuring IT systems are connected and tested, given the tight six-month compliance window.
• Demonstrate operational readiness: Regulators expect evidence that EU accounts are functional and scalable. Firms should conduct stress tests, simulate trade transfers, and obtain written confirmations from CCPs to prove compliance with EMIR 3’s operational requirements.
• Plan for representative trade execution: Firms need a strategy to route a minimum number of representative trades to EU CCPs each period. Coordination between trading and compliance is essential, and firms should monitor activity to meet thresholds or qualify for exemptions like the 85% EU clearing safe harbour.
• Evaluate impact on risk and collateral: Clearing in multiple CCPs may reduce netting benefits and raise collateral demands. Firms should assess increased margin needs and operational complexities, such as managing separate margin calls and settlement cycles, and plan accordingly.
• Timeline and enforcement: The AAR is in effect, with first compliance deadlines in mid to late 2025. Regulators will monitor implementation closely, and non-compliance could lead to steep penalties. Firms should engage early with authorities to clarify obligations and avoid enforcement risks.

 

Conclusion

The Active Account Requirement represents a significant new compliance dimension for EU derivatives users. Its introduction signals that regulatory priorities are shifting in favour of onshoring more clearing activity for both stability and strategic reasons.

While the operational and strategic adjustments for firms are non-trivial, this is also an opportunity to reassess clearing arrangements and optimize them within the new framework.

With thoughtful planning, investment in infrastructure, and possibly recalibration of trading habits, firms can meet the AAR in a way that mitigates disruption. As always, close coordination between legal, compliance, trading, and treasury functions will be crucial.

Firms should continue to monitor ESMA’s final rules and guidance over 2025. Engaging legal advisors can help interpret evolving regulatory expectations and design compliance solutions (such as group structuring or exemptions usage) tailored to your business.

By staying ahead of these changes, in-scope clients can not only avoid penalties but also contribute to a more stable EU-centric clearing ecosystem – aligning with the regulators’ end goal while safeguarding their own operational efficiency.

 

Read more

To read more on this topic, please refer to this article.

 

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¹By way of Commission Implementing Decision (EU) 2025/215 adopted on 30 January 2025.
²E. CALLENS, “EMIR 3.0: Active Account Proposal Seeks to Reduce EU Reliance on Third Country CCPs”, Financial Law Institute, Working Paper Series, working paper no. WP 2023-08, 2023, 2.