European Securities and Markets Authority Publishes Proposed EU Clearing and Derivatives Trading Obligations Changes for LIBOR Transition

The European Securities and Markets Authority has published a final report and final draft Regulatory Technical Standards to amend the EU clearing and trading derivative obligations for the benchmark transition to risk-free rates. To support the transition away from EONIA and LIBOR to risk-free rates such as €STR, ESMA is proposing to amend the scope of the derivatives clearing and trading obligations for interest rate derivatives denominated in EUR, GBP, JPY and USD. In particular, ESMA is proposing to:

• Remove IRD classes referencing GBP and USD LIBOR from the clearing and trading obligations.
• Remove IRD classes referencing EONIA and JPY LIBOR from the clearing obligation.
• Introduce a clearing obligation for IRD classes referencing €STR, SONIA and SOFR.

The draft RTS have been submitted to the European Commission for endorsement.

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