Trade associations call for deletion of active account proposal in EMIR 3.0

A joint statement has been released by EFAMA and several major European trade associations regarding the proposed active account requirement under EMIR 3.0 by the EC. These associations express their opposition to the active account requirement, which would mandate all market participants to maintain active accounts at EU CCPs for clearing specific systemic derivatives contracts.
Instead of supporting this requirement, the associations advocate for measures that would enhance the attractiveness of EU clearing and EU Capital Markets, including those proposed in EMIR 3.0. They stress the need to streamline the supervisory framework for EU CCPs across member states and make EU CCPs‘ offerings more innovative. They argue that these incentivizing measures would contribute to the sustainable growth of EU CCPs while maintaining competitive and open markets.
The statement highlights the potential negative consequences of the active account requirement, such as fragmentation, loss of netting benefits, and reduced resilience to market stresses in EU capital markets, with no tangible benefits to EU financial stability. It also raises concerns about the competitive disadvantage it could create for EU firms compared to third-country firms, which would continue to transact in global markets without such restrictions.
Moreover, the trade associations emphasize the importance of policymakers conducting comprehensive and robust cost-benefit assessments before implementing significant policies like the active account requirement, pointing out that such an assessment has not yet been conducted.
They stress the need to preserve the global clearing ecosystem, avoid disruption and fragmentation, and maintain a proportionate regulatory framework that promotes liquidity and clearing volumes in the EU.
The statement also mentions the existing regulatory tools, such as EMIR 2.2, which they believe provide European authorities with effective tools to supervise systemically important third-country CCPs. They suggest that the EMIR 3.0 proposal could enhance supervisory cooperation with third-country authorities.
Regarding the location requirement, the trade associations argue that imposing such a requirement for market participants in the EU would make it one of the few advanced capital markets with such a policy. They believe that central clearing markets are inherently global and should be overseen through shared oversight frameworks.
Finally, the proposed active account requirement is seen as challenging the principle of best execution for end clients. EU clients required to clear on an EU CCP might have to accept uncompetitive prices compared to Tier 2 CCPs, while their third-country competitors could trade at better prices.