HMT consults on updating the UK's exemption framework for intragroup over-the-counter derivatives

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.

Key provisions include:

• Expanding the availability of permanent intragroup exemptions for margin and clearing by amending the requirements for an intragroup transaction in Article 3 of UK EMIR, such that it no longer links to equivalence decisions under Article 13 of UK EMIR. This means if transactions meet the remaining criteria in Article 3, they will be considered intragroup transactions regardless of whether the intragroup counterparty is located in a jurisdiction which has been declared equivalent under Article 13 of UK EMIR.
• Streamlining the intragroup exemption process for margin and clearing to make it more efficient for firms to obtain and use exemptions by amending Articles 4 and 11 of UK EMIR. For example, firms would only need to notify the FCA of their intention to use these exemptions and for the FCA to not object to the use of the exemption within a 30-day period, replacing the current approval requirement under TIGER.
• Introducing transitional provisions allowing firms currently benefitting from intragroup exemptions granted under TIGER to continue benefitting from these exemptions once this regime expires without the need to re-apply to the FCA (subject to certain conditions).

The draft SI does not make changes relating to the exemption from applying credit valuation adjustment (CVA) capital requirements. The UK Prudential Regulation Authority has already announced a framework by which it will exempt intragroup transactions from CVA capital requirements. This framework will come into effect, alongside the wider UK implementation of the Basel 3.1 reforms, on 1 January 2027. Technical comments on the draft SI are due by 16 January 2026, and the SI is expected to be laid before Parliament in the first half of 2026 to allow for the new framework to be brought into force at the expiry of TIGER at the end of 2026.

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