ESAs propose extending the EMIR equity option exemption

The ESAs have proposed a two-year extension to the equity option exemption from bilateral margining under EMIR. The current temporary exemption, set to expire on 4 January 2024, could be extended until 4 January 2026, according to joint draft RTS published by the ESAs. These RTS provide guidance to market participants on handling equity options from the expiration of the current temporary exemption.
This extension comes within the context of ongoing negotiations regarding the EMIR Review. The ESAs emphasize the necessity for a clear decision on the treatment of equity options and advocate for a long-term solution by co-legislators. The proposal aims to prevent market instability and the abrupt need for operational and legal adjustments by market participants.
In addition to the extension proposal, the ESAs issue a no-action opinion. This opinion suggests that competent authorities should not prioritize supervisory or enforcement actions related to bilateral margining requirements for equity options until 4 January 2026, or the adoption of a long-term solution. The ESAs highlight the importance of continuity and avoiding undue disruption in the regulatory framework for equity options.
The proposal takes into account amendments to EMIR agreed upon by the EP’s ECON Committee and Coreper in November and December 2023, respectively. These amendments introduce specific provisions on equity options, including a permanent exemption.