AFG Position paper – Response to the European Commission’s EMIR 3.0 proposal

AFG has responded to the European Commission’s EMIR 3.0 proposal, which seeks to improve the central clearing framework and reduce exposure to systemic clearing services of third country CCPs.
AFG welcomes the proposal, especially the improvement of the CCPs regulatory framework on margin transparency and clarifications on transaction exemptions. AFG also support ESMA’s approach of distinguishing cleared and uncleared derivatives products.
However, AFG is concerned about the design of active accounts under the proposal, as it may have unintended negative consequences for EU Capital Market participants and investors.
AFG advocates for a consistent and sustainable calculation method for OTCDs and ETDs.
AFG calls for the permanent recognition of UK CCPs or systematic recognition beyond June 2025, reflecting the fact that the UK has retained and transposed UK EMIR and UK EMIR REFIT.
AFG believes that any legislative measure requiring industry to maintain active accounts at an EU CCP should not become counterproductive to the overall objective.
AFG also requests permanent exemption from the margin obligation for single stock & equity index options and exclusion of physically settled FX forwards and swaps from the calculation of clearing thresholds.
AFG advocates for a flexible exemption regime for intra-group transactions involving non-EU states for clearing thresholds and expansion of the list of eligible collateral for Initial Margin to include money market funds.
Finally, AFG would like confirmation of the 4-month transition period for the implementation of VM documentation.