ESMA proposes pension funds central clearing to begin in 2019

ESMA has proposed a further two year delay from central clearing for pension funds, which were set to begin complying from June 2017.

Europe’s pension funds are expected begin central clearing for OTC derivatives in June 2019, its regulatory watchdog has stated, giving them a further two years to prepare from the original deadline.

An exemption from the central clearing mandate of interest rate and credit default swaps was set to expire for category 3 firms, which include pension funds and insurance companies, on 21 June 2017.

The European Securities and Markets Authority (ESMA) has proposed aligning compliance dates for pension funds and for financial counterparties with “a limited volume of derivatives activity” for 21 June 2019.

ESMA’s proposal is to amend EMIR’s regulations to prolong the phase-in period by two years for category three firms – those which are not part of the group above the €8 billion threshold which will be expected to clear from December 2016.

However, ESMA’s proposal disagrees with certain arguments made by the industry that the smallest counterparties should be exempt completely from the mandate.

ESMA’s proposal has been submitted to the European Commission for final endorsement.