The European Commission (the Commission) has adopted a report in accordance with article 85(2) of the European Markets Infrastructure Regulation (EMIR) which assesses the progress and effort made by central counterparties (CCPs) in developing technical solutions for the transfer by pension scheme arrangements (PSAs) of non-cash collateral as variation margin (VM), as well as the need for any measures to facilitate such solution.
A three-year temporary exemption from the EMIR central clearing requirement was provided for PSAs that meet certain criteria set out in article 89(1) EMIR. The exemption was intended to allow CCPs time to develop technical solutions for the transfer of non-cash collateral to meet VM calls. The exemption is due to expire in August 2015.
However, in the report the Commission states that appropriate technical solutions have not yet been made and that the adverse effect of centrally clearing derivative contracts on the retirement benefits of future pensioners remains unchanged. In light of this the Commission intends to extend the duration of the exemption by a further two years. The extension would be by way of a Commission delegated act which would need to be adopted by the College of Commissioners.
The Commission will continue to monitor the situation with regard to technical solutions for PSAs to post non-cash assets to meet CCP VM calls in order to assess whether this period should be extended by a further year.