EMIR 3.0: Europe’s road to clearing autonomy

Key Takeaways

• EMIR 3.0 signals a shift toward greater EU autonomy in clearing.
• AAR boosts EU clearing capacity while balancing reliance on London.
• Early investment brings smoother operations, reduced risks, and stronger competitiveness.

The EU’s long journey to strengthen its grip on derivatives clearing has reached an important new stage. First introduced in 2012 in the wake of the global financial crisis, the European Market Infrastructure Regulation (EMIR) sets out to make derivatives markets safer, more transparent, and less exposed to systemic risk. Its core pillars were mandatory central clearing of standardized OTC derivatives, margin requirements for non-centrally cleared trades, and comprehensive trade reporting.

Yet in practice, much of the clearing of euro-denominated derivatives — particularly interest rate swaps (IRS) and credit default swaps (CDS) — has remained concentrated in London. This dependence became more sensitive after Brexit, when UK clearinghouses, still dominant in these markets, were no longer under EU supervision.

With EMIR’s latest update, EMIR 3, in force since December 2024, the EU is not just rebalancing the post-Brexit clearing landscape; it’s also asserting greater autonomy. By steering systemic activity into EU-based CCPs, it reduces reliance on London and strengthens supervisory reach. As Klaus Löber, Chair of the European Securities and Markets Authority (ESMA) CCP Supervisory Committee notes, the reform is more than a legislative update: it recalibrates supervisory culture and represents a milestone in EU self-reliance.

Bringing clearing home

EMIR 3.0’s core component is the Active Account Requirement (AAR), effective since June 2025. It mandates that EU financial and large non-financial counterparties open accounts at EU-based central counterparties for specific products. These include euro and Polish zloty interest rate derivatives, short-term euro rate derivatives, and certain credit default swaps. This applies even if those trades are already cleared in the UK.

While AAR does not ban third-country CCPs, the measure reflects a calibrated policy: reducing reliance on London and building EU clearing capacity, while stopping short of mandating full relocation.

Regulatory Technical Standards and ESMA oversight

The rules are still being fine-tuned. Following its June 2025 Final Report on the AAR regulatory technical standards (RTS), which defined ‘active use’, benchmarking, and reporting, ESMA’s draft RTS are now with the European Commission and could become legally binding by year-end, pending approval by the European Parliament and Council.

AAR can be seen as more than a compliance exercise. By moving euro-denominated clearing into EU CCPs, it can improve collateral efficiency, lower margin and capital costs through multilateral netting, and strengthen risk management. As firms onboard under EMIR 3.0, deeper EU liquidity is expected to make these CCPs more competitive and give market participants new opportunities to optimize portfolios.

Yet the shift also carries trade-offs: maintaining parallel accounts across CCPs can erode netting efficiency, increase collateral and margin demands, and add operational complexity. Staying ahead will require investment in legal coordination, system connectivity, and reporting to ensure routing, settlement, and oversight remain efficient.

Beyond AAR, other EMIR 3.0 measures are advancing. These include updates to the clearing obligation, better access for smaller firms, and expanded supervisory powers for ESMA over third-country CCPs. Building on EMIR 2.0, which introduced recognition and risk monitoring, EMIR 3.0 allows ESMA to demand more detailed reporting, impose stricter conditions, and tighten oversight of systemically important non-EU CCPs. While ESMA cannot enforce EU law abroad, it can limit or condition access to manage EU exposure.

Looking ahead, 2026 could be a key year: once the technical standards are endorsed, full enforcement of AAR is expected. By June, EU Member States must also transpose changes to the Capital Requirements Directive and Investment Firm Directive, giving national regulators the mandate to apply EMIR 3.0 within firms’ prudential frameworks.

Implications for the EU and UK

The impact of EMIR 3.0 varies by region. EU firms must adapt clearing activity to meet AAR requirements and prepare for possible further localization, reflecting ESMA’s policy push to reduce reliance on third-country CCPs. Meanwhile, UK CCPs and firms, though granted equivalence until mid-2028, face increasing scrutiny as the EU seeks to lessen its dependence on London, heightening risks of liquidity fragmentation and regulatory divergence.

Unlike EU firms, UK participants aren’t required to repatriate clearing and can still access EU CCPs, recognized by the UK as third-country venues. However, they must comply with both UK EMIR and EU CCP rulebooks, aligning systems, reporting, and governance across regimes. Though exempt from localization pressures, they face significant planning and investment to meet dual compliance demands.

Technical and operational implications

Meeting EMIR 3.0 obligations goes beyond legal compliance. Firms must integrate EU CCPs into existing clearing flows, ensure reporting systems can track activity by asset class and CCP, and embed AAR compliance into governance and risk frameworks. Many will also need to invest in new data infrastructure, automate reconciliation and reporting, and strengthen operational controls to avoid bottlenecks. The shift may also affect collateral and margin management, requiring careful planning to preserve netting efficiencies across multiple CCPs.

What’s next for EMIR 3.0 enforcement?

With rules set to tighten in 2026, both EU and UK firms face pressure to upgrade systems and governance. Supervisors are already expecting progress to be made well before full enforcement, warning that EMIR 3.0 will require significant planning and proactive investment to manage fragmentation and keep clearing strategies aligned. Firms that move early to embed the new requirements will be best placed to navigate regulatory change and benefit from a stronger EU market infrastructure.