EMIR 3.0: Active Account Proposal Seeks to Reduce EU Reliance on Third Country CCPs
On 7 December 2022, the European Commission published its long-anticipated ‘EMIR 3.0’ proposal to improve the attractiveness of EU central counterparties (CCPs) and to foster the resilience of central clearing in the EU. In an attempt to reduce reliance of EU market participants on third country CCPs, the texts from the Commission propose substantial amendments to the 2012 European Market Infrastructure Regulation (EMIR) and related EU legislative acts such as the Capital Requirements Regulation (CRR) . Central to the suggested reforms is the proposed requirement for certain EU market participants to clear at least a portion of ‘systemically relevant derivatives’ through ‘active accounts’ at EU CCPs, i.e. mandatory accounts at EU CCPs through which a certain level of central clearing activity would have to occur. This paper provides a first analysis of the proposed active account requirement and frames it against the post-Brexit EU drive to limit risks to the EU financial system that may follow from strong reliance by EU market participants on clearing services provided by UK CCPs.