On 04 July 2018 at the margins of plenary session in Strasbourg, legislators from the European Parliament, representatives of the Member States and the European Commission started the final phase of legislative review of proposed regulation amending Regulation (EU) 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories (“EMIR REFIT” proposal). This was the first political trilogue discussion on the proposed legislation hosted by the Austrian Presidency of the Council.

The meeting was focused on three contentious issues, in respect of which the biggest discrepancy between the Parliament’s and the Council’s positions has emerged in a result of their respective review of the proposal. These include – (1) exemption for pension scheme arrangements (PSAs) from clearing obligation, (2) scope of requirements for financial counterparties (FCs) and non-financial counterparties (NFCs) and (3) suspension of clearing obligation. In respect of the PSA’s exemption from clearing obligation, while representatives of all three institutions agreed that the extension of the exemption was necessary, there was no agreement on a specific duration of thereof and all parties maintained their original positions for the time being. Some progress was made on the scope of FCs and NFCs obligations, including provisional agreement that UCITS and AIFs shall calculate positions in OTC derivatives at the level of the fund. Finally, initial progress has also been made in respect of provisions on suspension of clearing obligation, when the parties provisionally agreed to support the Council’s proposal regarding the use of immediately applicable implementing acts for the purpose of the suspension, and three-month duration of thereof.

While the agenda of the meeting was focused on political issues, the participants also agreed the list of technical points that will be reviewed during the subsequent technical trilogue meetings. These include, among other, provisions relating to the removal of frontloading and backloading obligations, reporting requirements by UCITS and AIFs, validation by authorities of bilateral margin models, disclosure of initial margins and insolvency-related provisions. This list may be adjusted as discussions move forward.

Date for the next political trilogue meeting remains to be confirmed but it is not expected to take place before later August / early September, i.e. following summer recess of the European Parliament.