On 9 July 2021, the European Securities and Markets Authority (ESMA) issued a consultation paper on draft regulatory technical standards (RTS) that amend the existing RTS on the clearing obligation and derivatives trading obligation that have been developed under the European Market Infrastructure Regulation and the Markets in Financial Instruments Regulation respectively. The draft RTS relate to the benchmark transition away from EONIA and LIBOR and on to new Risk-Free Rates.

There are currently three Commission Delegated Regulations on the clearing obligation and one on the derivatives trading obligation. They mandate a range of interest rate and credit derivative classes to be cleared, and for a subset of these, to also be traded on venue. In view of the transition, there is a need to review the scope of the clearing obligation and the derivatives trading obligation for the classes and currencies impacted by these changes, namely interest rate derivative classes in EUR, GBP, JPY and USD. The draft RTS in Annex II of the consultation paper include the proposed amendments to reflect the changes deriving from the transition.

The deadline for comments on the consultation paper is 2 September 2021.

ESMA will then review the responses to the consultation paper in order to finalise the draft RTS this Autumn.

The draft RTS will then be submitted to the European Commission for endorsement in the form of Commission Delegated Regulations.