The European Securities and Markets Authority (ESMA) has announced the launch of its first selection procedure for a consolidated tape provider (CTP) for over-the-counter (OTC) derivatives. ESMA encourages interested entities to register and submit their requests to participate by 11 February. The CTP aims to enhance transparency and efficiency in the OTC derivatives market by consolidating post-trade data from trading venues and other contributors into a single, continuous electronic stream. This consolidated view of market activity is intended to support more accurate and timely information access, improve price discovery and contribute to EU initiatives such as the Savings and Investment Union.

The CTP will collect and disseminate OTC derivatives data in line with ESMA's proposals set out in its final report on transparency for derivatives. Regarding next steps, ESMA will assess the requests it receives against the applicable exclusion and selection criteria and invite successful candidates to submit full applications. Any queries during the application phase will be handled through the EU Funding & Tenders Portal, which also has the contract notice and procurement document available. A reasoned decision on the selected CTP is expected by early July, after which the chosen provider will operate the OTC derivatives tape for a five‑year term, subject to ESMA authorisation and supervision.

The UK Financial Conduct Authority (FCA) has published policy statement PS25/24 finalising its revised approach to the ancillary activities test (AAT). The AAT determines when non financial firms trading commodity derivatives may rely on the ancillary activities exemption (AAE) instead of requiring investment firm authorisation for commodity derivatives or emission allowances trading that is ancillary to their main business.

HM Treasury made legislative changes by laying the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2025, giving the FCA the power to set the rules defining the conditions under which firms can rely on the AAE. Following its July consultation, the FCA has finalised its proposals largely as consulted on. From 1 January 2027, firms will be able to qualify for the AAE by satisfying any one of three independent tests: (i) a new GBP3 billion annual threshold test based solely on OTC cash settled derivatives exposure (with exchange traded derivatives expressly excluded following industry feedback); (ii) a modified trading test; or (iii) a modified capital employed test. The trading and capital employed tests will retain their existing methodology for calculating these tests but will now be subject to a 50% threshold. Transitional relief will apply until 1 January 2028, and firms currently relying on the AAE are advised to familiarise themselves with the new conditions and prepare for annual calculations under the updated framework.

The European Securities and Markets Authority (ESMA) has published its final report under the MiFIR Review on derivatives transparency, package orders, and the over-the-counter (OTC) derivatives consolidated tape input and output data. The final report includes ESMA's assessment and feedback received to the MiFIR Review consultation package published in April, covering the new MiFIR transparency regime for exchange-traded derivatives (ETD) and OTC derivatives and the corresponding amendments to Commission Delegated Regulation (EU) 2017/583 2 on transparency for non-equity instruments ("RTS 2").

Based on the new scope of derivatives subject to transparency, it sets the approach for the liquidity determination relevant for pre-trade waivers and introduces amendments to post-trade transparency fields and flags.

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The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) have published a joint report reviewing the implementation of their margin requirements framework for non-centrally cleared derivatives. Originally introduced in September 2013, the framework's final phase of implementation was completed in September 2022. According to the report, implementation has now reached a steady state. The assessment, drawing on a 2024 quantitative impact study, member surveys, and recent international margin-related work, concludes that the framework has been effectively applied. It has materially increased the amount of margin exchanged for non-centrally cleared derivatives since 2012, enhancing financial system resilience. No material issues were identified, and no changes to the framework are proposed. However, the BCBS-IOSCO Working Group on Margining Requirements recommends ongoing monitoring through supervisory information exchange and experience sharing among member authorities to address evolving market practices.

The Bank of England has published a consultation paper proposing to exempt transactions arising from post-trade risk reduction (PTRR) services from the derivatives clearing obligation under Article 4 of the UK European Market Infrastructure Regulation (UK EMIR). The proposal introduces a formal definition of PTRR services, including portfolio compression, portfolio rebalancing and basis-risk optimisation, and sets strict conditions for eligibility. To qualify for an exemption from the clearing obligation, transactions must be executed under an eligible agreement that identifies when the PTRR service becomes binding and includes supporting legal documentation.

It also needs to be part of a PTRR exercise that operates on non-discretionary, pre-set parameters, produces binding outcomes for all participants, and is not designed to circumvent the clearing obligation under UK EMIR Article 4(1). PTRR providers must establish participants' risk tolerances, provide transparency on how the exercise will operate, and ensure independence from market participants. Additional safeguards include notifying the BoE of their intention to offer PTRR services for the first time, confirming any changes or prior to ceasing providing any eligible PTRR service, and supplying details of each eligible service type to enable regulatory oversight and assess financial stability impacts. The deadline for comments is 11 March 2026. These changes are proposed to come into force three months after the publication of final rules.

The European Securities Markets Authority (ESMA) has published a statement clarifying upcoming reporting obligations under EMIR 3 (Regulation (EU) 2024/2987). The active account requirement (AAR), effective since 25 June, will require the first reporting submission by July 2026, including backlog data from June 2025 and 2026 activity. ESMA has submitted draft regulatory technical standards (RTS) on AAR conditions, adopted by the European Commission on 29 October and currently under legislative scrutiny. In the interim, ESMA will develop additional instructions on how to report according to the templates included in the RTS. This is to provide clarity for reporting entities and ensure that competent authorities receive meaningful and consistent information.

Additionally, counterparties recognised as third-country central counterparties (CCPs) under EMIR Article 7d must report annually to their competent authorities. ESMA will define the reporting content in forthcoming RTS and ITS. Until these standards are published, inconsistencies and operational burdens may occur. To ease implementation, the first Article 7d report (covering 2025 data) will be submitted with the 2026 cycle after Level 2 measures are in place. ESMA and national authorities will continue stakeholder engagement to ensure smooth EMIR 3 implementation.

The European Commission (EC) has published a Communication to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions on further development of capital market integration and supervision within the Union, announcing a set of major legislative reforms. The package seeks to address obstacles to innovation and barriers to integration resulting from divergent rules, duplicative requirements and inconsistent supervision. The EC proposes a suite of amendments to key EU financial services and capital markets legislation in a package described as a central component of the savings and investments union (SIU), specifically a:

• Regulation which will amend: (i) the European Securities and Markets Authority (ESMA) Regulation; (ii) the European Markets Infrastructure Regulation (EMIR); (iii) the Markets in Financial Instruments Regulation (MIFIR); (iv) the Central Securities Depositories Regulation (CSDR); (v) the Distributed Ledger technology Pilot Regulation (DLTPR); (vi) the Markets in cryptoasset Regulation (MiCAR); and (vi) the Cross-Border Distribution of Funds Regulation (CBDR). It also includes targeted amendments, in line with the changes proposed to the ESMA regulation aimed at making EU supervision more efficient, to: (a) the Central Counterparties Recovery and Resolution Regulation (CCPRRR); (b) the Securities Financing Transactions Regulation (SFTR); (c) the Credit Ratings Agency Regulation (CRAR); (d) the Benchmark Regulation (BMR); (e) the simple, transparent and standardised (STS) securitisation Regulation; (f) the European Green Bond Regulation (EuGB Regulation); (g) the Environmental, Social and Governance (ESG) rating Regulation.

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The UK Financial Conduct Authority (FCA) has published policy statement PS25/17 on removing the systematic internaliser regime for bonds, derivatives, structured finance products and emission allowances from 1 December.

Following feedback from its July consultation, the FCA is adopting all proposals as consulted on, except for the second proposed change to the price waiver. That change would have allowed a trading venue to derive the price from the best bid and offer prices on the lit order book where reference price orders are placed, which would allow placing mid-price dark orders below large in scale on lit order books. The FCA remains minded to implement this change after gathering further information to ensure the change does not weaken the information content of post-trade data. The FCA expects to finalise a proposal on post-trade transparency in its forthcoming consultation on equity transparency. Meanwhile, from 20 March 2026, trading venue operators will be permitted to use a broader set of prices from a wider set of venues when crossing orders for equities under the reference price waiver.

The FCA also confirms the repeal of the rule that prevents investment firms from carrying out matched principal trading on their multilateral trading facilities and from operating an organised trading facility in the same entity for which they are a systematic internaliser from 30 March 2026.

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The UK Prudential Regulatory Authority (PRA) and the UK Financial Conduct Authority (FCA) have published a policy statement finalising amendments to the Binding Technical Standards (BTS 2016/2251) on margin requirements for non-centrally cleared derivatives under UK EMIR. Following feedback on its March consultation, the regulators confirm the rules are largely as proposed, including: (i) an indefinite exemption from the bilateral margining requirements for single-stock equity options and index options; (ii) the removal of the obligation to exchange initial margin (IM) on outstanding legacy contracts where a firm subsequently falls below the in-scope thresholds; and (iii) allowing UK firms to use another jurisdiction's threshold assessment calculation periods and entry into scope dates to determine whether those transactions are subject to certain IM requirements, when transacting with a counterparty subjected to the margin requirements in that jurisdiction. Other than these, only minor technical amendments were made. The final text of the FCA and PRA instruments amending BTS 2016/2251 can be found in the appendices to the policy statement. The amendments to the BTS are effective immediately, from 27 November.

The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2025 has been laid before the UK Parliament, accompanied by an explanatory memorandum. This follows the draft version laid in July. The order amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) to reform the ancillary activities exemption (AAE). The AAE allows firms dealing in commodity derivatives, emissions allowances or related derivatives as an ancillary activity to be exempt from seeking investment firm authorisation. The order introduces changes giving the FCA a new rule-making power to set criteria for determining when such trading qualifies for exemption. The current AAE is replaced with a more proportionate regime offering two options: (i) assessing whether the activity is ancillary to the firm's main business at group level; or (ii) checking whether the activity is below an annual monetary threshold determined by the FCA. The order also makes consequential amendments allowing the FCA to direct how firms provide calculation data under both tests and removes references to assimilated law that FCA rules will replace.

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The UK Financial Conduct Authority (FCA) has published its findings from its multi-firm review of contracts for difference (CFD) providers, assessing compliance with the consumer duty's "price and value" outcome. The review found examples of good practice but highlighted significant concerns and areas needing improvement. While some firms simplified charging structures and restricted high-risk retail clients, many failed to make meaningful changes following implementation of the duty, with board reports often restating requirements rather than analysing compliance. Fair value assessments (FVAs) were frequently inadequate, focusing narrowly on spreads and execution speed while overlooking material costs such as overnight funding charges and ancillary fees. The FCA highlighted poor transparency on fee structures and unjustified overnight funding charges, including on matched positions, which can create substantial costs with little benefit.

Few firms pay interest on client margin deposits despite high market rates, raising further concerns about fair value. Weaknesses also persisted in monitoring vulnerable clients, appropriateness testing and not adequately considering consumer complaints in FVAs. CFDs remain complex and risky products, and the FCA warns that foreseeable harm could arise from practices such as charging for hedged positions without offsetting costs. The regulator will engage directly with firms showing poor compliance and consider further action, stressing that CFD providers must deliver good outcomes, communicate clearly and ensure fair value under the consumer duty. The FCA encourages CFD manufacturers and distributors to consider these findings and address these identified gaps.

The European Banking Authority (EBA) has launched a data collection, through competent authorities, to identify EU counterparties who must apply to the EBA for validation of the ISDA standard initial margin model (SIMM) under the European Market Infrastructure Regulation (EMIR) and their contact persons. All financial and non-financial counterparties exchanging initial margins calculated using ISDA SIMM, directly or indirectly, must apply for authorisation from their competent authority, as mandated by Article 11(3) EMIR and the EBA's no-action letter of 17 December 2024. The information provided will be used to onboard counterparties onto the EBA's validation system during the first half of 2026, ahead of counterparties' applications to the EBA for validation of ISDA SIMM expected in the second half of 2026. Failure to obtain validation will prohibit the use of ISDA SIMM until counterparties rectify their status with the EBA. A list of validated counterparties is expected by the end of 2026.

HM Treasury (HMT) has published a draft statutory instrument (SI), the Over the Counter Derivatives (Intragroup Transactions) Regulations 2026, for technical comment, alongside a policy paper. The proposed Regulations aim to replace the temporary intragroup exemption regime (TIGER), which expires on 31 December 2026, with a permanent framework for intragroup exemptions from clearing and margin requirements under the UK European Market Infrastructure Regulation (UK EMIR). The draft SI should be read alongside the UK Financial Conduct Authority's consultation paper, published on the same day, which sets out supporting proposals to simplify the exemption process.

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The UK Financial Conduct Authority (FCA) has published consultation paper CP25/30 on changes to its binding technical standards (BTS) on the intragroup exemption regime under the UK European Market Infrastructure Regulation (UK EMIR). The consultation should be read alongside HM Treasury's (HMT) draft statutory instrument (SI), published on the same day for technical comment, which sets out the proposed amendments to UK EMIR. This consultation summarises HMT's proposed legislative changes to the intragroup regime and sets out the FCA's proposals to implement these changes alongside additional changes to consolidate the regime and further reduce burdens on counterparties.

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The European Systemic Risk Board (ESRB) has published a report analysing the credit default swaps (CDS) market, with a particular focus on single-name CDSs in terms of their market structure and current regulatory framework. The report evaluates the EU regulatory framework for CDSs and the functioning of the CDS market in light of recent derivatives market instability, notably the March 2023 banking turmoil. The ESRB identifies key vulnerabilities and calls for improved data quality, enhanced transparency, and greater cross-border regulatory co-ordination. To address these issues, it sets out a medium-term policy roadmap aimed at improving the functioning of the single-name CDS market and addressing systemic risks.

Key proposals include:

• Enhancing post-trade market transparency for single-name CDSs.
• Strengthening supervisory access to information through improved quality and standardisation of data reported as well as through enhanced global co-operation.
• Promoting the efficiency and functioning of the single-name CDS market.
• Improving credit risk assessment frameworks by reducing excessive reliance on CDS spreads and raising awareness of the price formation mechanisms.

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Five technical standards supplementing the Markets in Financial Instruments Regulation enabling the creation of the consolidated tape have been published in the Official Journal of the European Union (OJ):

• Commission Delegated Regulation (EU) 2025/1143 regarding regulatory technical standards (RTS) on the authorisation and organisational requirements for approved publication arrangements (APAs) and approved reporting mechanisms (ARMs), and on the authorisation requirements for consolidated tape providers, and repealing Commission Delegated Regulation (EU) 2017/571.
• Commission Delegated Regulation (EU) 2025/1155 regarding RTS specifying the input and output data of consolidated tapes, the synchronisation of business clocks and the revenue redistribution by the consolidated tape provider for shares and exchange traded funds, and repealing Commission Delegated Regulation (EU) 2017/574 from 2 March 2026. Articles 11 to 16 will apply from 2 March 2026.

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The Bank of England and the UK Financial Conduct Authority (FCA) have published additional finalised Q&As on derivative reporting requirements under the UK European Market Infrastructure Regulation (UK EMIR) following a consultation on the draft Q&As in August. The additional Q&As include: (i) Q&A 4.14, which provides guidance on when it is acceptable to report with a technical International Securities Identification Number (ISIN). Following feedback to the consultation, an additional scenario has been included alongside those originally specified, and a technical ISIN has been created for use in the specified scenarios; and (ii) Q&A 11.7, which provides detailed guidance on the reporting of FX swaps. Further clarification has been added to this Q&A, including the addition of a table illustrating reporting expectations for FX swaps. The FCA has appended the finalised Q&As to the relevant sections of its UK EMIR reporting Q&As.

The Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025 have been published, accompanied by an explanatory memorandum. The Regulations will make changes to UK legislation to implement the UK's commitments under the Berne Financial Services Agreement (BFSA), signed with Switzerland in December 2023. The BFSA is an outcomes-based mutual recognition agreement covering a range of wholesale financial services, including asset management, banking, investment services, insurance and financial market infrastructure, as well as the provision of investment services to sophisticated high net worth clients. The BFSA allows UK insurance companies to offer certain wholesale insurance services in Switzerland without needing Swiss authorisation, while Swiss firms can offer certain investment services to sophisticated clients in the UK without requiring UK authorisation.

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The UK Financial Conduct Authority (FCA) has issued a warning to investors regarding contracts for difference (CFDs), a type of derivative that allows speculation on the price movement of shares or assets without owning the underlying asset. The FCA expresses concern that some firms are using high-pressure tactics to encourage investors to self-certify as professional clients, which thereby removes key retail consumer protections, potentially exposing individuals to losses beyond their financial capacity.

The regulator also raises concerns about the role of social media influencers in promoting offshore firms and unrealistic returns, often without disclosing that such firms are unregulated. The FCA reminds firms that they must not push elective professional or redirection promotions onto their retail clients, otherwise it will take action against firms who breach its rules. The FCA also reiterates its commitment to targeting "finfluencers" who unlawfully promote financial products and services. Firms are also reminded of their obligations under the consumer duty and investors are encouraged to use the FCA's InvestSmart tools to support informed decision-making with their investments.

The European Commission has adopted a Delegated Regulation supplementing the European Market Infrastructure Regulation (EMIR), setting out regulatory technical standards (RTS) for the new active account requirement introduced by EMIR 3. The RTS follow the European Securities and Markets Authority 2024 consultation and specify the operational conditions, representativeness obligations and reporting requirements for the active account mandate.

The RTS specify minimum operational conditions, including legal and technical arrangements to support clearing services and internal systems to handle increased clearing volumes. Firms must also conduct annual stress tests to demonstrate IT connectivity and operational readiness. Reporting is required every six months, with the first report due six months after the Regulation enters into force. The aim is to reduce systemic risk and strengthen the resilience of EU clearing infrastructure. The Regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.

The Basel Committee on Banking Supervision (BCBS) has published a final technical amendment to the Basel framework, clarifying the treatment of guarantees and credit derivatives used to hedge counterparty credit risk (CCR) from derivative exposures. The technical amendment, revised following consultation feedback, applies specifically to a bank's use of fixed or capped protection and excludes securities financing transactions (SFTs) and securitisation exposures. Amendments have been made to the credit risk and CCR standards to align the treatment of guarantees and credit derivative protection with that of eligible collateral under the CCR framework.

These changes aim to clarify how fixed or capped protection should be reflected in exposure calculations and address inconsistencies in the application of the framework. As a technical amendment, it does not constitute a substantial change to the standards but resolves ambiguities that could not be addressed under the existing rules. Supervisors and the BCBS will monitor implementation and potential circumvention strategies, with the possibility of extending similar treatment to SFTs and securitisations if necessary. BCBS members have agreed to implement the amendment as soon as practical and within three years at the latest.

Delegated Regulation 2025/1265 supplementing the Capital Requirements Regulation (Regulation (EU) No 575/2013) (CRR) has been published in the Official Journal of the European Union (OJ). The Delegated Regulation, adopted in July, sets out regulatory technical standards (RTS) specifying the method for identifying the main risk driver of a position and for determining whether a transaction represents a long or short position as referred to in Articles 94(3), 273a(3), and 325a(2) of the CRR. The Delegated Regulation enters into force on 3 November.

The European Securities and Markets Authority (ESMA) has published a Q&A (ESMA_QA_2660) on whether reporting counterparties can submit a single consolidated Errors and Omissions Notification for exchange-traded derivatives when multiple Entities Responsible for Reporting (ERRs) which are managed by the same management company or AIFM are involved. ESMA confirms that this is permissible. Firms should specify in their notification that the issue relates to multiple ERRs and include relevant details of all affected ERRs.

The UK Financial Conduct Authority (FCA) has published Market Watch 84, sharing observations on the first year of UK European Market Infrastructure Regulation (EMIR) Refit implementation. The Refit, effective from 30 September 2024, made changes to the UK EMIR reporting regime aimed to enhance transparency and data quality in derivatives reporting. The FCA reports that by the end of the transition period on 31 March, 95% of reports were successfully uplifted, though some counterparties failed to meet the deadline. The FCA identified two main drivers for this: (i) inadequate resource planning, which led to delays in system testing, late discovery of issues and insufficient time for resolution. The FCA emphasises the need for firms to allocate appropriate resources to change management supported by clear policies, procedures and effective change-related documentation; and (ii) over-reliance on external vendors, who struggled to support clients due to limited capacity and competing priorities. The FCA reminds firms that while vendors may assist with reporting, the responsibility for data accuracy and completeness remains with the counterparty.

The FCA also raised concerns over the low volume of breach notifications received, suggesting underreporting of material issues. Firms are reminded of their obligation to ensure complete and accurate reporting, regardless of vendor involvement, and to notify the FCA promptly of any material errors. Looking ahead, the FCA's focus over the next 12 months will be on improving data quality, monitoring reconciliation rates and assessing firms' systems and controls. Counterparties should review their arrangements in light of these priorities.

A Delegated Regulation amending Delegated Regulation 876/2013 supplementing EMIR (Regulation 648/2012) regarding changes to the functioning and management of colleges for central counterparties, has been published in the Official Journal of the European Union (OJ). The amendments are limited in scope and aim to align the existing regulatory framework with recent changes made by Regulation 2024/2987—part of the broader EMIR 3 reform package. The Regulation will enter into force on 15 October.

The Bank of England (BoE) and Financial Conduct Authority (FCA) have together published a consultation paper on proposed additional Q&A under the UK's European Market Infrastructure Regulation. The proposed Q&A relate to the reporting of FX swaps and reporting with technical ISIN. Responses to the consultation may be submitted to either the BoE or the FCA until 12 September.

The Bank of England (BoE) has published a policy statement confirming its amendments to the trade repository reporting requirements under the UK's European Market Infrastructure Regulation (EMIR). In June last year, the BoE had consulted on proposed revisions to the Technical Standards (EMIR Reporting and Data Quality and Miscellaneous Amendments) Instrument 2023. In the policy statement, the BoE confirms that the changes will take effect largely as proposed, except for minor changes to validation rules. On the same day, the Financial Conduct Authority (FCA) published the Technical Standards (EMIR Reporting and Data Quality and Miscellaneous Amendments) Instrument 2025. Both the FCA and BoE changes take effect on 26 January 2026.

The draft Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025 have been laid before Parliament and published with a draft explanatory memorandum. The Regulations seek to implement the UK's commitments under the Berne Financial Services Agreement (BFSA), signed with Switzerland in December 2023. The BFSA is an outcomes-based mutual recognition agreement covering a range of wholesale financial services, such as asset management, banking, investment services, insurance and financial market infrastructure, as well as investment services to high-net-worth and sophisticated individuals.

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The OTC Derivatives Risk Mitigation and Central Counterparties (Equivalence) (Switzerland) Regulations 2025 have been laid before Parliament and published with an explanatory memorandum. The Regulations, made on 16 July, grant equivalence to Switzerland's regulatory regimes for over-the-counter (OTC) derivatives and central counterparties (CCPs). The equivalence decision enables UK firms to rely on Swiss risk mitigation standards for OTC derivative contracts, subject to certain conditions being met, and allow Swiss CCPs to provide clearing services in the UK, subject to the CCP being recognised by the Bank of England (BoE). This removes duplicative regulatory requirements and supports cross-border financial market access as expressed under the Berne Financial Services Agreement (BFSA). The equivalence determinations were made following assessments by HM Treasury, with input from the UK Financial Conduct Authority, UK Prudential Regulation Authority and BoE, and are part of the UK's broader move to replace EU-inherited equivalence regimes with tailored Overseas Recognition Regimes. The Regulations enter into force on 1 January 2026.  The draft Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025, which have also been laid before Parliament, will implement other aspects of the BFSA. You may like to watch our webinar of 3 July in which our lawyers discuss the BFSA.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/20 on the systematic internaliser (SI) regime for bonds and derivatives. The consultation builds on the November 2024 final policy statement which introduced new bond and derivative transparency rules for trading venues and discussed the future of the SI regime. Given the removal of the pre-trade transparency from SI's obligations in bonds and derivatives, the FCA is now consulting on the SI regime and continued alignment between the transparency and SI regimes, along with additional proposals aimed at enhancing the functioning of UK markets.

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The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards (RTS) specifying methods for identifying the main risk driver of a position and determining whether a transaction represents a long or short position. The proposed general method to identify the main risk driver hinges on sensitivities defined under the market risk standardised approach (FRTB-SA) or on add-ons defined under the standardised approach for counterparty credit risk (SA-CCR). For the determination of the direction of the positions, the methodology is aligned with the one set out in the technical standards developed in accordance with Article 279a(3), point (b), of the CRR. For relatively simple instruments, such as fixed-rate bonds, floating-rate notes, stocks, forwards, futures, simple swaps and plain vanilla options, a simplified method has also been specified. The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union.

The European Banking Authority (EBA) has published technical advice to the European Commission, alongside a press release, on a possible Delegated Act concerning fees for the validation of pro forma models under the European Market Infrastructure Regulation (EMIR). EMIR, as amended by EMIR 3, requires that counterparties apply for authorisation to their competent authorities before using, or adopting a change to, a model for initial margin calculation used as a risk-mitigation technique for over-the-counter (OTC) derivative contracts not cleared by a central counterparty (CCP). The EBA is charged with establishing a central validation function for the elements and general aspects of pro forma models, and any changes to those. It must also charge an annual fee, per pro forma model, to counterparties using the pro forma models it validates.

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A Corrigendum to Regulation (EU) 2024/2987, referred to as the revised European Market Infrastructure Regulation (EMIR 3), has been published in the Official Journal of the European Union. This Regulation amends Regulations (EU) No 648/2012 (EMIR), No 575/2013 (Capital Requirements Regulation) and (EU) 2017/1131 (Money Market Fund Regulation) to introduce measures aimed at mitigating excessive exposures to third-country central counterparties. The Corrigendum corrects a legal reference concerning the identification of high-risk third countries for anti-money laundering and counter-terrorist financing purposes. Specifically, it replaces an incorrect reference to Regulation (EU) 2024/1624 with the correct citation to Directive (EU) 2015/849, known as the Anti-Money Laundering Directive.

The European Securities and Markets Authority (ESMA) has published two consultation papers (CP) proposing draft regulatory technical standards (RTS) mandated under the review of European Market Infrastructure Regulation (EMIR 3).

• Draft RTS on EMIR 3 margin transparency requirements (under article 38 EMIR), regarding the information to be provided by central counterparties (CCPs) on their margin simulation tools and by clearing service providers (CSPs) on their margin simulation requirements; and by both on their margin models. The aim is to improve transparency for clearing participants and enable them to better predict margin calls.
• Draft RTS on clearing fees and associated costs (under article 7c(4) EMIR), specifying further details of the information to be disclosed by CSPs regarding clearing fees and associated costs, with the aim of increasing costs transparency.

The deadline for responses is 8 September. ESMA will submit the final draft technical standards to the European Commission by 25 December.

Following its consultation, the European Securities and Markets Authority (ESMA) has published a final report, including final draft regulatory technical standards (RTS), on the conditions of the Active Account Requirement under the amended European Market Infrastructure Regulation (EMIR 3). The active account requirement requires EU counterparties active in certain derivatives to hold an operational and representative active account at an EU-authorised CCP. The final draft RTS sets out the operational conditions of the account, details of the representativeness obligation and the reporting requirements for in-scope entities as amended by ESMA following its consideration of feedback to the proposed RTS. ESMA's final report discusses the feedback received and explains its decision for either maintaining the original proposal or making changes. ESMA will now submit the final draft RTS to the European Commission for approval. The Active Account Requirement applies from 25 June. Until such time as the Active Account RTS enter into force, in-scope entities should discuss compliance with their national competent authority.

The European Commission has adopted a Delegated Regulation amending Delegated Regulation (EU) No 876/2013, which supplements EMIR (Regulation (EU) No 648/2012) in relation to the functioning and management of colleges for central counterparties (CCPs). The amendments are limited in scope and aim to align the existing regulatory framework with recent changes made by Regulation (EU) 2024/2987—part of the broader EMIR 3 reform package. The amendments have specifically modified: (i) article 2, to reflect the changes introduced in article 18(1) of EMIR, specifying the deadline for establishing a college and clarifying the role of the co-chairs in the context of the establishment of such college; (ii) articles 3 and 4, to align with article 18 of EMIR, clarifying the roles of the co-chairs and the governance structure of colleges to ensure their effective and consistent functioning for all CCPs across the Union; and (iii) article 5, to specify the additional information that a CCP's competent authority must provide to college members, and to require the use of the central database established under article 17c of EMIR for information exchange. This Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union.

Four industry associations—EFAMA, EACP, ISDA, and FIA—have published a letter addressed to the European Securities and Markets Authority (ESMA) and the European Commission (EC), raising concerns about the implementation of the active account requirement (AAR) under EMIR 3, set to take effect on 24 June. The associations emphasised the importance for the final level 2 regulatory technical standards (RTS) on the conditions of the AAR to be published in the Official Journal of the European Union before the AAR becomes applicable. Without the RTS, EU financial market participants would not be able to understand the requirements that need to be complied with on day 1.

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The Pension Fund Clearing Obligation Exemption (Amendment) Regulations 2025 (SI 2025/670) have been published, alongside an explanatory memorandum. The regulations amend the UK version of Regulation 2012/648 (UK EMIR) and remove the current expiry date of the exemption for UK and EEA pension schemes from the UK EMIR clearing obligation. This follows the publication of the draft version of the regulations in March and mirrors the EU's introduction of a permanent exemption for non-EU pension schemes–further details can be found in our article EMIR 3 – Impact on cleared OTC derivatives markets. The intention of the change, as explained in the explanatory memorandum, is to ensure pension funds remain able to invest in productive assets, as removing the exemption would require them to increase cash holdings and potentially increase pressure on the liquidity management of pension funds, particularly in stressed market conditions. The regulations came into force on 11 June.

The UK Financial Conduct Authority (FCA) has published quarterly consultation paper No 48, accompanied by a press release, inviting feedback on proposed amendments to its Handbook. Key proposals include:

• Amending guidance in SUP 6.4 to reflect legislative changes introduced in section 415AA of the Financial Services and Markets Act 2000 (FSMA); the deadline for comments is 14 July.
• Streamlining data reporting by decommissioning certain requirements, including changes to REP009 (consumer buy-to-let mortgage aggregated data) reporting frequency and removing nil return requirements for REP008 (notification of disciplinary actions relating to conduct rules staff other than SMF managers); the deadline for comments is 30 June.

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The Bank of England and the UK Financial Conduct Authority have published a joint consultation paper proposing amendments to the UK EMIR trade repository reporting requirements, using their powers under article 9 of UK EMIR and section 138P of the Financial Services and Markets Act 2000 (FSMA). The proposed changes follow the full implementation of the UK EMIR Refit in March and aim to make the reporting regime run more smoothly.

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A corrigendum to Regulation (EU) 2024/2987, known as EMIR 3, was published in the Official Journal of the European Union. One of the changes EMIR 3 made was to amend the Money Market Funds Regulation (MMF Regulation) by adjusting the rules addressing counterparty risk in financial derivative transactions to take account of whether a transaction is cleared by an EU authorised or recognised CCP. The corrigendum makes a change to those adjusted rules by clarifying that in Article 17 of the MMF Regulation, it is the cash provided, rather than the cash received, by a Money Market Fund (MMF) as part of each reverse repurchase agreement that must not exceed 15% of the assets of the MMF.

Commission Delegated Regulation (EU) 2025/1003 has been published in the Official Journal of the European Union (OJ), supplementing the EU Markets in Financial Instruments Regulation (MiFIR) as regards over-the-counter derivatives (OTC) identifying reference data for the purposes of MiFIR transparency requirements. The delegated regulation sets out the identifying reference data for OTC interest rate swaps and OTC credit default swaps, to meet transparency requirements under article 8a(2), 10 and 21 of MiFIR. The data will enable market participants and authorities to identify and distinguish these derivatives by asset class, instrument type, notional currency, among other relevant characteristics. The regulation will enter into force on 11 June 2025 and will apply from 1 September 2026.

The European Securities and Markets Authority (ESMA) has published a response to the European Commission's consultation on the functioning of commodity derivative markets and certain aspects of spot energy markets. ESMA provides its input on the issues identified in the consultation, including inefficiencies and overlaps in reporting under MiFIR, EMIR and REMIT. The response covers the following issues from the consultation paper:

• Data harmonisation. ESMA recalls the findings of the EC's 'Fitness Check of EU 2 Supervisory Reporting Requirements' which identified inefficiencies, lack of standardisation and duplications between EMIR, MiFIR and REMIT reporting obligations. ESMA agrees there is a need for streamlining the reporting frameworks.

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The UK Financial Conduct Authority (FCA) has published Handbook Notice 129 which sets out changes to the classes of derivatives subject to the derivatives trading obligation (DTO), following policy statement PS25/2 published in April (please see our update). The DTO requires certain financial and non-financial counterparties to trade specific standardised and liquid over-the-counter (OTC) derivatives on regulated trading venues or equivalent third-country venues. The FCA determines the classes of derivatives that are subject to the DTO. The FCA has decided to expand the classes of secured overnight financing rate overnight index swaps (SOFR OIS) to increase the benefits of on-venue trading. It also establishes a new framework to provide exemptions from the DTO for transactions arising from the use of post-trade risk reduction (PTRR) services. The PTRR services now expand beyond portfolio compression and exemptions have been extended so they are also not subject to best execution and trading venue authorisation obligations, in addition to the current DTO exemption. The changes are set out in the following draft instruments:

• Technical Standards (Markets in Financial Instruments Regulation) (Derivatives Trading Obligation and Transparency) (Amendment) Instrument 2025, amending Commission Delegated Regulation (EU) 2017/2417 with regards to regulatory technical standards on the trading obligation for certain derivatives.
• Markets in Financial Instruments Regulation (Post-trade Risk Reduction Services Rules) (Amendment) Instrument 2025, amending the glossary and GEN Sch 4 in the Handbook. It also introduces a new chapter MAR 12 containing the relevant rules.

Both instruments come into force on 30 June.

The European Central Bank (ECB) has published the results of its latest survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives, with a press release. The survey is a qualitative survey conducted every three months among large banks and dealers active in the relevant euro-denominated markets. The results are from the March 2025 survey, which covered changes in credit terms between December 2024 and February 2025. Key findings include: (i) overall credit terms remained largely unchanged during the relevant period; (ii) financing rates/spreads and haircuts in securities financing transactions decreased across most asset classes; and (iii) demand for funding secured against domestic government bonds decreased for the first time since 2021. The survey also highlights there were no net changes to price terms, with only minor net changes to non-price terms, as well as a slight increase found in hedge funds with regards to the use of financial leverage. For the various types of non-centrally cleared OTC derivatives, few changes were recorded for initial margin requirements, credit limits and liquidity. However, respondents pointed out a change with regard to the duration and persistence of valuations disputes, which decreased across all types of derivatives.

The Financial Markets Standards Board (FMSB) has published a spotlight review on ways to improve uncleared margin for over-the-counter (OTC) derivatives, along with a press release. It builds on findings from the Bank of England's Post-Trade Task Force, which highlighted multiple inefficiencies in its report 'Charting the Future of Post-Trade' published in April 2022. This review specifically focused on uncleared margin practices for bilaterally negotiated OTC traded derivatives, where clearing and settlement is also carried out noncentrally between the two parties. The working group generally agreed on the drivers of inefficiencies, but there were differences of opinion on the scale of these problems, and their potential solutions and viability. It conducted a survey to draw out the extent of agreement on a range of problems and their potential solutions to emphasise the specific topics which the industry may have the most success in taking forward in the future.

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The European Securities and Markets Authority (ESMA) has published its 2024 report, along with a press release, on the quality and use of data, showcasing significant increase in data use by authorities. The report covers datasets from the European Market Infrastructure Regulation (648/2012) (EMIR), the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR), the Markets in Financial Instruments Regulation (600/2014) (MiFIR), the Securitisation Regulation (2017/2402/EU), the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) and the Money Market Funds Regulation ((EU) 2017/1131) (MMF Regulation). This edition also expands the scope to include the European Single Electronic Format (ESEF) data and short-selling data. The report is divided into different sections.

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The Financial Markets Standards Board (FMSB) has issued a Statement of Good Practice (SoGP) on the governance of sustainability-linked products (SLPs), along with a press release. SLPs are products where the financial and/or structural characteristics can vary depending on whether the user (i.e., borrower or issuer of, or counterparty to, SLPs) achieves specific sustainability or ESG objectives. They can be used for general corporate purposes, which allows many users (e.g., borrowers, issuers or counterparties to SLPs) to access the sustainable finance market in a more flexible way. With the growth of SLP issuances and accompanying concerns around the credibility of such instruments, the SoGP is intended to: (i) codify good practices for the governance of SLPs and (ii) support the adoption of consistent governance approaches across asset classes and jurisdictions. This is aimed to enhance the quality and integrity of SLPs; boost market confidence; help mitigate greenwashing risk; and support the development of a deeper, more robust sustainability-linked product market. The SoGP will apply to service providers (e.g., firms acting as sustainability-linked loan lenders, bookrunners or lead arrangers on a sustainability-linked bond issuance or counterparties to a sustainability-linked derivative) or users of SLPs in wholesale financial markets and to support, and be read in conjunction with, existing asset-class specific guidance (notably ICMA, LMA and ISDA principles).

The European Securities and Markets Authority (ESMA) has published a letter to the European Commission on the inconsistent regulation of trading of fractional shares across the EU. There has been an increase in the significance of fractional shares, which accounted for more than 10% of the total number of transactions reported in 2023-2024. However, shares and fractional shares are not uniformly defined under the Markets in Financial Instruments Directive (MiFID II) or the Markets in Financial Instruments Regulation (MiFIR), resulting in regulatory inconsistencies across the EU. ESMA states that while it has already taken action through its 2023 public statement to protect retail investors, uncertainty continues. The inconsistent treatment of fractional shares has the following key effects: (i) it impacts transparency and reporting requirements, (ii) it affects compliance with the MiFID systematic internaliser and share trading obligation rules; and (iii) it impacts the calculation of thresholds for data reporting services providers derogation criteria. ESMA believes consistent classification would help create a level playing field for firms and support retail participation in this market segment. ESMA suggests it would be beneficial to clarify that fractional shares, which replicate the key characteristics and trading environment of shares, should remain subject to the MiFIR rules for shares.

The European Securities and Markets Authority (ESMA) has published a consultation paper setting out draft regulatory technical standards (RTS) amending the RTS on the clearing thresholds (CTs) under the European Markets Infrastructure Regulation (EMIR). Under the latest revisions to EMIR, known as EMIR 3, the calculation of CTs will be amended (once these RTS enter into force), shifting away from distinguishing between exchange-traded derivatives (ETD) and over-the-counter (OTC) derivatives (where only OTC derivatives counted towards the threshold) to a framework based on the level of OTC-uncleared transactions. Financial counterparties (FCs) will need to calculate their uncleared positions and their aggregate OTC exposure (both cleared and uncleared) to determine if they exceed the CTs. Non-financial counterparties (NFCs) will be required to count only their uncleared positions towards the CTs.

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