The European Securities and Markets Authority (ESMA) has published final draft regulatory technical standards specifying how post-trade risk reduction (PTRR) services qualify for the clearing exemption under the European Market Infrastructure Regulation (EMIR 3). The standards cover compression, portfolio rebalancing and basis risk optimisation, including combinations of these services. They largely retain the February 2026 consultation proposals, with limited adjustments following feedback. The conditional exemption has applied since 24 December 2024, while the technical standards remain subject to European Commission endorsement. Qualifying exercises must reduce overall risk in each participating portfolio, preserve market risk within minimal tolerances and avoid increasing aggregate net uncleared risk in any submitted portfolio. Portfolios may contain both cleared and uncleared transactions. ESMA clarified that providers assess market risk neutrality against the portfolios submitted to the exercise, rather than participants’ wider holdings, and has not prescribed numerical tolerance thresholds or a mandatory risk metric. Providers would need to test algorithms, maintain controls against circumvention and address conflicts of interest specific to PTRR services. Participants must accept or reject the proposed exercise in full. Records demonstrating compliance would have to be retained for at least 10 years, with existing exercise documentation usable where it contains the required information. The monitoring framework would require annual compliance confirmations and supporting reports to providers’ competent authorities, alongside prompt notification of material changes or noncompliance. Annual reports must capture all changes to providers’ rules, but only material changes to methods and algorithms. ESMA submitted the final report to the European Commission on Oct. 9, 2026. The Commission has three months to decide whether to endorse the proposed standards.
European Securities and Markets Authority finalises draft standards for post-trade risk reduction clearing exemptions under EMIR 3
The European Securities and Markets Authority has finalised draft standards for post-trade risk reduction services using the existing EMIR 3 clearing exemption, largely retaining its consultation proposals. Exercises must reduce risk in each participating portfolio, remain market risk neutral within minimal tolerances and not increase aggregate net uncleared risk. The standards also specify provider controls, annual compliance reporting and record retention of at least 10 years, and await European Commission endorsement.