On 8 August 2018, the European Securities and Markets Authority (ESMA) published an updated communication on the clearing and trading obligation for pension scheme arrangements (PSAs).

In the communication, ESMA appreciates that certain PSAs would face challenges to start clearing their over-the-counter (OTC) derivative contracts and trading them on trading venues on 17 August 2018, the date when the current temporary exemption from the clearing obligation under EMIR expires.

ESMA states that from a legal perspective, neither it nor Member State competent authorities possess any formal power to dis-apply a directly applicable EU legal text or even delay the start of some of its obligations. Therefore any changes to the application of EU rules would formally need to be implemented through EU legislation, and in this case through the amendments to EMIR resulting from the Refit negotiations.

However, ESMA acknowledges the difficulties that certain PSAs may face to start clearing their OTC derivative contracts and trading them on trading venues on 17 August 2018 in the eventuality the Refit proposal is not application by then, and during this expectedly limited period of time until the day when the exemption will be effective again.

In this respect ESMA expects Member State competent authorities to not prioritise their supervisory actions towards entities that are expected to be exempted again in a relatively short period of time and to generally apply their risk-based supervisory powers in their day-to-day enforcement of applicable legislation in a proportionate manner.