On 17 December 2020, the European Securities and Markets Authority (ESMA) issued its second report on the clearing solutions for Pension Scheme Arrangements (PSAs) under EMIR.

Last year, EMIR REFIT further extended the temporary exemption from the clearing obligation for PSAs until June 2021. To monitor the progress made by the different actors involved towards possible clearing solutions for PSAs by that date, ESMA has been mandated to draft an annual report as input to the European Commission’s report on the clearing solutions for PSAs. The second report will serve as input to the next report of the Commission.

As detailed in the second report, ESMA states that it seems very unlikely that after so many efforts from all stakeholders and regulators since the start of the exemption, a new and never thought of ‘silver bullet’ solution emerges at this stage. This also means that the solution seems to be the optimisation by different actors (regulators, central counterparties, clearing members and their clients) of already existing solutions. Although some of these existing solutions need to be further developed or might need regulatory consideration, their addition should provide the conditions for PSAs to be able to clear and meet variation margin calls in all states of the market that have been considered in the discussions.