ESMA reports early impact of AAR on EU clearing activity under EMIR 3

The European Securities and Markets Authority (ESMA) has published an interim report on the effectiveness of the Active Account Requirement (AAR) under the revised European Market Infrastructure Regulation 2024/2987 (EMIR 3), alongside the first annual report of the Joint Monitoring Mechanism (JMM), which monitors developments and financial stability risks across the EU clearing ecosystem.

ESMA's findings in the interim report indicate early signs of increased clearing activity at EU central counterparties (CCPs), particularly among smaller firms, with some entities fully relocating positions to the EU. The reports also identify a gradual but limited shift in certain products from systemically important third-country CCPs (Tier 2 CCPs) to EU CCPs. The interim report constitutes the first stage of a two-stage process of assessing implementation of the AAR, and its findings should be considered as preliminary. ESMA will complete a final assessment of the AAR in 2027 once additional data becomes available.

Looking more broadly at the EU clearing ecosystem, the JMM report highlights significant cross-border interdependencies, particularly between the EU and the U.S. It finds that EU entities, primarily banks, have considerable exposures to US CCPs, while U.S firms are active participants in EU and Tier 2 CCPs, and provide essential services such as liquidity, custody, and payments. While these interdependencies are said to support market efficiency and liquidity, the report states they may also transmit financial shocks across jurisdictions. In addition, the JMM noted an expansion in the range of products and asset classes cleared in the EU, and conducted a stocktake of existing EU-wide stress testing exercises to identify potential synergies for monitoring risks across the wider clearing ecosystem.

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