ESMA reviews the scope of clearing and derivatives trading obligations


The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has today published its final report on the clearing (CO) and derivative trading (DTO) obligations to accompany the benchmark transition.

The report sets out proposed draft Regulatory Technical Standards (RTS) amending the scope of the CO and DTO for over-the-counter (OTC) interest rate derivatives (IRD) denominated in EUR, GBP, JPY, and USD.

The report is part of the transition away from EONIA and LIBOR and onto alternative benchmarks, primarily Risk-Free Rates such as €STR, SOFR, SONIA and TONA.

ESMA’s proposed amendments aim to ensure a smooth benchmark transition while maintaining an effective scope for these obligations, in line with the G20 objectives. The proposals include:

  • for the CO – introduce the TONA OIS (with maturities up to 30 years) class and extend the SOFR OIS class (up to 50 years); and
  • for the DTO – introduce certain €STR OIS classes.

In preparing the report, ESMA worked closely with authorities from third country jurisdictions who are currently also revising their respective CO and DTO, to facilitate international convergence as far as possible. ESMA had already submitted to the European Commission a first set of draft RTS amending the scope of the CO and of the DTO in November 2021, which have since then entered into force.

Next steps

The draft RTS have been submitted to the European Commission for endorsement.

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