EMIR

EMIR comes up when an OTC derivative is traded with a bank, fund, or company based in the EU and the question is whether the counterparty has clearing, collateral exchange, or trade reporting obligations.

What the regulation requires

EMIR (the European Market Infrastructure Regulation) requires EU financial counterparties (FCs) and non-financial counterparties (NFCs) to clear OTC derivatives and to exchange collateral on uncleared trades, among other things. Reporting of derivative contracts is not limited to OTC derivatives; it covers all derivative contracts. Entities outside the EU can also be covered when they enter into contracts with an EU FC or NFC.

The regulation aims to make the over-the-counter derivatives market more transparent and to reduce counterparty credit risk and operational risk. The European Commission explains that the EU adopted EMIR in 2012 because the 2008 financial crisis exposed weaknesses in the OTC derivatives market¹. Its relationship to the G20 agreement on OTC derivatives reform is covered in The G20 OTC Derivatives Reforms.

As its title says, the regulation covers OTC derivatives, central counterparties, and trade repositories. A central counterparty (CCP) is the institution that takes on the clearing. A trade repository (TR) is a legal person that centrally collects and maintains the records of derivatives². The regulation sets out four things³.

Legal basis and supervision

EMIR is Regulation (EU) No 648/2012 of the European Parliament and of the Council of July 4, 2012⁴. An EU regulation is binding in its entirety and directly applicable in all Member States⁵. The regulation is divided into nine Titles. The table below covers Titles I to VII. Title VIII contains common provisions, and Title IX contains transitional and final provisions.

The Title headings and article ranges in the table follow the table of contents on legislation.gov.uk⁶.

The table below shows who is responsible for what. FCs and NFCs are defined in the "Who is covered" section.

Regulatory technical standards (RTS) are standards that EMIR asks to be developed to set out the details of a matter. European supervisory authorities such as ESMA prepare the draft, and the European Commission adopts it¹⁵.

The regulation also covers how violations are treated. Competent authorities publish the penalties they impose for infringements of the clearing and reporting obligations and similar provisions, except in cases such as where publication would seriously jeopardize the financial markets¹⁶. An infringement does not affect the validity of an OTC derivative contract or the possibility of enforcing its terms, and it does not give the counterparty a right to claim damages¹⁷.

The text was checked as published on October 3, 2026.

Who is covered

EMIR imposes obligations on FCs and NFCs. The regulation applies to CCPs and their clearing members, FCs, and TRs, and applies to NFCs and trading venues where it so provides¹⁸.

The regulation lists the following as FCs¹⁹.

The directives and regulation in the table are other EU laws that EMIR cites to define the FC categories. UCITS and AIFs set up only for employee share schemes, and AIFs that are securitization special purpose entities, are excluded.

A non-financial counterparty is an undertaking established in the EU other than a CCP or an FC²⁰.

Parties outside the scope, and exemptions from the clearing obligation

EMIR does not apply to the following parties, or exempts them in part.

To use the intragroup exemption, two parties established in the EU notify their competent authorities in writing at least 30 calendar days beforehand. For one party in the EU and one outside, the EU party obtains authorization from its competent authority²⁶.

Entities outside the EU

EMIR can also reach the transactions of entities not established in the EU. The clearing obligation applies to a contract between an FC or NFC and a third-country entity that would be subject to the clearing obligation if it were established in the EU. It also applies to a contract between two such third-country entities when the contract has a direct, substantial, and foreseeable effect within the EU, or when the obligation is necessary or appropriate to prevent the evasion of the regulation²⁷. The risk-management obligation for uncleared trades extends to contracts between third-country entities on the same conditions²⁸.

The CCP used for clearing must be either a CCP authorized in the EU or a third-country CCP recognized by ESMA²⁹. The European Commission adopts decisions finding that the legal and supervisory framework of a third country is equivalent to the EU's. A CCP or TR located in that country can then apply to ESMA for recognition³⁰. On January 31, 2025, the European Commission adopted a decision extending the equivalence of UK CCPs by three years, until June 30, 2028³¹.

What EMIR requires

Clearing obligation

An OTC derivative contract is subject to the clearing obligation if it meets all three of the following conditions²⁷.

1. It belongs to a class declared subject to the clearing obligation.
2. It was entered into or novated on or after the date on which the clearing obligation takes effect.
3. On the date it was entered into or novated, both parties fall into one of the combinations in the table below.

Whether an FC or NFC in the table is "subject to the clearing obligation" depends on the "Clearing thresholds" below.

Figure 1 runs a contract through the conditions above and then through the exemption table, in that order.

Figure description

The figure checks whether an OTC derivative contract is subject to the EMIR clearing obligation through four questions in order. A no to any of the first three questions means it is outside the obligation. The last question runs the other way: a yes (a transaction in the exemption table) means it is outside the obligation. If all are passed, it is in principle subject to the obligation. The conditions for each exemption (notification and the requirements listed in the provisions) and for combinations involving non-EU entities are not drawn, and are covered in the earlier section and the section on non-EU entities.

Consider a hypothetical example in which Bank K, a credit institution in the EU that is an FC subject to the clearing obligation, enters into an OTC derivative contract of a class declared subject to the clearing obligation, on or after the date on which the obligation takes effect.

The classes subject to the obligation are determined as follows.

1. When a competent authority authorizes a CCP to clear a class of OTC derivatives, it notifies ESMA without delay.
2. Within six months of that notification, after a public consultation and consulting the European Systemic Risk Board (ESRB), ESMA submits to the European Commission draft RTS that specify the class, the date from which the obligation takes effect (including any phase-in), and other matters. In preparing the draft, ESMA considers the degree of standardization of contractual terms and operational processes, the volume and liquidity, and the availability of fair, reliable, and generally accepted pricing information.
3. When the European Commission adopts the RTS, the class becomes subject to the obligation³².
4. ESMA lists the class, the CCPs that can clear it, and the date from which the obligation takes effect in a public register³³.

Contracts subject to the obligation are cleared through a CCP authorized in the EU or recognized, and listed in the register. To clear, a party becomes a clearing member, becomes a client of a clearing member, or enters into indirect clearing arrangements. Indirect arrangements are limited to those that do not increase counterparty risk and that ensure the assets and positions receive equivalent protection²⁹. Clearing members and clients that provide clearing services must do so on fair, reasonable, non-discriminatory, and transparent commercial terms³⁴.

The post-trade risk reduction (PTRR) exemption in the table above works as follows. Transactions resulting from compression, rebalancing, and optimization services are exempt from the clearing obligation when the service provider and the participants meet the conditions. The provider must be authorized under Directive 2014/65/EU and independent of the parties to the transactions. Other conditions include that the service reduces the risk of each portfolio submitted, is market risk neutral, and does not contribute to price formation²⁵.

Clearing thresholds

Every 12 months, an FC or NFC may calculate its OTC derivative positions and compare them with the clearing thresholds. Calculating is optional. The notification and the four-month period apply to a party that does not calculate in the same way as to one that exceeds the threshold. The scope of clearing differs, as the table below shows: an NFC that exceeds the threshold clears only in the classes where it exceeds it, and an NFC that does not calculate clears in all classes subject to the obligation.

An FC's positions are the average of month-end positions over the previous 12 months, include the contracts of other entities in the group, and are counted fund by fund for UCITS and AIFs. An NFC does not count contracts that are objectively measurable as reducing risks directly relating to commercial activity or treasury financing activity.

Once subject to the clearing obligation, a party continues clearing even if its positions fall to or below the threshold, until it demonstrates to the competent authority that this is so and that its calculation method does not systematically underestimate its positions³⁸.

The thresholds are set by class of OTC derivative, in gross notional value. The current thresholds on the ESMA page (as of October 2026) are as follows³⁹.

The ESMA page does not say whether these values apply to the aggregate positions of an FC or to uncleared positions. ESMA's final report describes the thresholds at the time of the consultation as based on positions that combine cleared and uncleared positions⁴⁰.

ESMA sets the threshold values in RTS and reviews them at least every two years⁴¹. On February 25, 2026, ESMA submitted to the European Commission draft RTS that revise the thresholds to fit the new regime under EMIR 3. The draft sets separate thresholds for the aggregate positions of FCs and for the uncleared positions of FCs and NFCs. The aggregate-position thresholds cover only credit and interest rate⁴². The thresholds in the draft are as follows.

The table of current thresholds shows the values on the ESMA page, and it will change when the draft is adopted and applies.

Risk management for uncleared trades

For uncleared OTC derivative contracts, the regulation requires the following procedures⁴³.

"Article 10 NFCs" in the table are the NFCs referred to in Article 10, which Article 11 requires to mark to market and exchange collateral³⁷. For FCs, the collateral procedures apply to contracts entered into on or after August 16, 2012. For NFCs that exceed the clearing threshold, they apply to contracts entered into on or after the date the threshold was exceeded, and the NFC puts the arrangements in place within four months of the notification. Contracts entered into during those four months are exempt⁴⁴. The levels of collateral and the segregation arrangements are for the European Supervisory Authorities (ESAs) to set out in draft RTS under the regulation⁴⁵.

Using or changing a model to calculate initial margin requires prior authorization by the competent authority. The authority responds within six months to an application for a new model and within three months to an application to change an existing one. A model based on a market-led pro forma model is validated by the European Banking Authority (EBA)⁴⁶. However, single stock options and equity index options that are not cleared are not required to have procedures for the exchange of collateral⁴⁷.

For intragroup transactions, there are exemptions from the exchange of collateral. Two parties established in the same Member State are exempt on conditions such as there being no current or foreseen practical or legal impediment to the prompt transfer of funds or repayment of liabilities. Where the parties are in different locations, or one is in the EU and one outside, the exemption requires a decision by the competent authority, or a notification to the authority with no objection from it⁴⁸.

Reporting obligation

Whether or not they are cleared, the details of all derivative contracts, and any modification or termination, are reported to a TR. The TR is one registered in the EU or recognized as a third-country TR. The deadline is the working day following the conclusion, modification, or termination of the contract⁴⁹. The obligation covers contracts that were entered into before February 12, 2014 and were still outstanding on that date, and contracts entered into on or after that date⁴⁹.

The counterparties and the CCP report, and reporting can be delegated⁵⁰. They must also have procedures to ensure the quality of the data reported⁴⁹. The content and format of reports are set by RTS and implementing technical standards (ITS). A report includes at least the parties, the type of contract, the underlying, the maturity, the notional value, the price, and the settlement date. The data formats include the LEI, the ISIN, and the UTI⁵¹. If no TR is available, parties report to ESMA⁵².

Reporting errors carry penalties. A competent authority imposes administrative fines or periodic penalty payments when reports repeatedly contain manifest and systematic errors. A periodic penalty payment is capped at 1% of the average daily turnover in the preceding business year⁵³.

Requirements for CCPs and TRs

A CCP provides clearing services after authorization by the competent authority of the Member State where it is established. The authorization specifies the classes it clears and is valid for the entire EU⁸. For an authorized CCP, the regulation sets organizational, conduct, and prudential requirements.

Prudential requirements also cover other financial resources, collateral requirements, investment policy, default procedures, review of models and stress testing, and settlement. The article ranges and items in the table follow the table of contents on legislation.gov.uk⁵⁴. How CCPs work is covered in Central Counterparties: JSCC, LCH, CME and Others.

A TR is a legal person established in the EU that is registered with ESMA when it meets the requirements for TRs¹¹. The requirements cover general requirements, operational reliability, safeguarding and recording, and transparency and data availability⁵⁵.

Entry into force and amendments

The main dates for EMIR are as follows. The categories in the table are adoption of the regulation, publication in the Official Journal, entry into force, and the start of application. EMIR 3 followed this order (entry into force and the start of application fall on the same day).

EMIR enters into force on the twentieth day following its publication in the Official Journal⁶⁰.

Figure 2 lays out the milestones from the table, adoption and entry into force, in time order.

Figure description

The figure arranges the dates relating to EMIR from oldest to newest. After EMIR entered into force, there were two periods of amendment. The filled dots mark the dates of entry into force. The spacing does not represent the length of time between dates.

The 2019 amendment (Refit)

EMIR Refit revised the clearing obligation, the suspension of the clearing obligation, reporting, risk mitigation for uncleared trades, the registration and supervision of TRs, and the requirements for TRs⁵⁷. It also introduced a new regime that determines when FCs and NFCs become subject to the clearing obligation. Under it, FCs and NFCs choose whether to calculate their positions and compare them with the thresholds³⁹. The details of this regime were changed by the 2024 amendment.

The 2024 amendment (EMIR 3)

EMIR 3 aims to make the EU clearing market more attractive, to strengthen the resilience of EU clearing arrangements, and to reduce excessive reliance on systemically important third-country CCPs⁵⁸. The main amendments are as follows.

The active account requirement applies to an FC or NFC that is subject to the clearing obligation and exceeds the clearing threshold for euro- or Polish zloty-denominated interest rate derivatives, or for euro-denominated short-term interest rate derivatives. It opens the account within six months of becoming subject to the obligation and notifies ESMA and the competent authority. Infringements are subject to measures such as periodic penalty payments capped at 3% of the average daily turnover⁶¹.

ESMA submitted the RTS setting out the operational conditions and reporting details of the active account requirement to the European Commission on June 19, 2025, and the Commission adopted it on October 29, 2025. As of December 11, 2025, ESMA states that the European Parliament and the Council are scrutinizing it. ESMA expected to receive the first reports on the active account requirement by July 2026⁵⁹.

Practical impact

When trading OTC derivatives with an EU FC or NFC, you determine for each trade whether the clearing obligation applies. For uncleared trades, FCs and NFCs confirm each contract and reconcile portfolios, and FCs and Article 10 NFCs also mark to market daily and exchange collateral. With an NFC, its position against the clearing threshold changes the scope of clearing. The counterparties and the CCP report derivative contracts to a TR by the next working day, and reporting can be delegated.

What this article does not cover

The Official Journal publication and start of application of EMIR itself, and the date on which EMIR Refit entered into force, are not covered on this page.

Notes

1. European Commission, "Derivatives / EMIR" (updated December 4, 2025; retrieved October 3, 2026), "What the EU is doing and why": "Role of derivatives" and "Objectives of EMIR". ↩

2. EMIR Article 2(2) ("trade repository"). ESMA, Interactive Single Rulebook (retrieved October 3, 2026). Below, footnotes on EMIR articles refer to the page of the article in the same source unless stated otherwise. ↩

3. EMIR Article 1(1). ↩

4. The title and date of Regulation (EU) No 648/2012 (version published on legislation.gov.uk). ↩ ↩²

5. EMIR Article 91 ("binding in its entirety and directly applicable in all Member States"). ↩

6. The Title headings and article titles for Titles I to VII in the table of contents of EMIR on legislation.gov.uk. The start and end of each article range match the table of contents in the ESMA Interactive Single Rulebook. ↩

7. EMIR Article 5(2) (ESMA develops draft RTS specifying the classes and other matters for adoption by the European Commission; the last subparagraph of paragraph 2 delegates the power of adoption to the Commission). ↩

8. EMIR Article 14(1) (application to the competent authority of the Member State of establishment) and (2) (valid for the entire EU). ↩ ↩²

9. EMIR Article 22(1). ↩

10. European Commission, "Derivatives / EMIR", "Objectives of EMIR", item "Increase transparency in the OTC derivatives markets". ↩

11. EMIR Article 55(1) (registration with ESMA), (2) (a legal person established in the EU that meets the requirements of Title VII), and (3) (valid for the entire EU). ↩ ↩²

12. EMIR Article 2(13) ("competent authority"). ↩

13. EMIR Article 10(5). ↩

14. EMIR Article 12(1). ↩

15. EMIR Article 5(2) (ESMA develops the draft and the power of adoption is delegated to the European Commission), Article 11(14) (same), and Article 11(15) (the ESAs jointly develop the draft and the power of adoption is delegated to the Commission). ↩

16. EMIR Article 12(2) (covers infringements of Articles 4, 5, and 7 to 11). ↩

17. EMIR Article 12(3). ↩

18. EMIR Article 1(2). ↩

19. EMIR Article 2(8)(a) to (g). ↩

20. EMIR Article 2(9). ↩

21. EMIR Article 1(4)(a), (b), and (c). ↩ ↩²

22. EMIR Article 1(5). ↩

23. EMIR Article 4(5) (conditions in points (a) to (c)). ↩

24. EMIR Article 4(4), last subparagraph. ↩

25. EMIR Article 4b(1) to (4) (authorization under Article 7 of Directive 2014/65/EU). ↩ ↩² ↩³

26. EMIR Article 4(2), second subparagraph, point (a) (two parties established in the EU) and point (b) (one party in the EU and one outside). ↩

27. EMIR Article 4(1), point (a)(i) to (v) and point (b). ↩ ↩²

28. EMIR Article 11(12). ↩

29. EMIR Article 4(3) (the first subparagraph covers the conditions for the CCP, namely authorization under Article 14 and recognition under Article 25; the second covers clearing members, clients, and indirect arrangements). ↩ ↩²

30. European Commission, "Derivatives / EMIR", "Equivalence decisions under EMIR". ↩

31. European Commission, "Derivatives / EMIR", "Policy making timeline", entry of January 31, 2025. ↩

32. EMIR Article 5(1) (notification from the competent authority to ESMA), (2)(a) and (b) (six months, public consultation, consultation of the ESRB, draft RTS), and (4) (the three criteria to take into account). ↩

33. EMIR Article 6(1) and (2)(a) to (c). ↩

34. EMIR Article 4(3a), first subparagraph. ↩

35. EMIR Article 4a(1) (every 12 months, notification, four months), (3) (group, fund by fund), and (5) (definition of "uncleared position"). ↩ ↩²

36. EMIR Article 10(3). ↩

37. EMIR Article 10(1). ↩ ↩²

38. EMIR Article 4a(2) (FCs) and Article 10(2) (NFCs). ↩

39. ESMA, "Clearing thresholds" (retrieved October 3, 2026), the opening paragraph, "When does…", "Value of the clearing thresholds", and "Notification". ↩ ↩² ↩³

40. ESMA, "Final Report On the draft technical standards amending Regulation (EU) 149/2013 to further detail the new EMIR clearing thresholds regime" (the final report below), Section 2, paragraphs 21 and 22 (page 11). ↩

41. EMIR Article 10(4), point (b) (threshold values set in RTS) and Article 10(4a) (review at least every two years). ↩

42. ESMA, "ESMA sets out clearing thresholds under EMIR 3" (February 25, 2026). The final report, Annex (pages 55 and 56) and Section 2, paragraphs 17 to 19. ↩

43. EMIR Article 11(1)(a) and (b), (2), (3), and (4). ↩

44. EMIR Article 11(3), first and second subparagraphs, and Article 11(2), second subparagraph. ↩

45. EMIR Article 11(15), first subparagraph, point (a). ↩

46. EMIR Article 11(3), third to fifth subparagraphs, and Article 11(12a) (including the definition of "pro forma model"). ↩

47. EMIR Article 11(3a), first subparagraph. ↩

48. EMIR Article 11(5) to (10). ↩

49. EMIR Article 9(1), first subparagraph (reporting to a TR, deadline), second subparagraph (data quality), and fourth subparagraph (February 12, 2014). A TR is registered under Article 55 or recognized under Article 77. ↩ ↩² ↩³

50. EMIR Article 9(1), first subparagraph (who reports), and Article 9(1f) (delegation). ↩

51. EMIR Article 9(5) (RTS; content of reports) and (6)(a) (ITS; data standards and formats). ↩

52. EMIR Article 9(3). ↩

53. EMIR Article 12(1a). ↩

54. The article titles in Title IV, Chapter 1 (Articles 26 to 35), Chapter 2 (Articles 36 to 39), and Chapter 3 (Articles 40 to 50) in the table of contents of EMIR on legislation.gov.uk (the version revised as UK law). ↩

55. The titles of Articles 78 to 81 in Title VII in the table of contents of EMIR on legislation.gov.uk (the version revised as UK law) ("General requirements" and three others). ↩

56. ESMA, "Post-trading" (retrieved October 3, 2026), "European Markets Infrastructure Regulation (EMIR)", first sentence ("EMIR came into force on 16 August 2012"). ↩

57. European Commission, "Derivatives / EMIR", "Policy making timeline", entries of May 20 and October 23, 2019, and "Relevant legislation", Refit. ↩ ↩² ↩³

58. ESMA final report, Executive Summary (page 6) and footnote 2, and "1 Introduction", paragraphs 2 and 3 (page 8). ↩ ↩² ↩³ ↩⁴ ↩⁵

59. ESMA, "ESMA communication on upcoming reporting obligations under EMIR 3" (December 11, 2025), page 1 (including footnote 1) and page 2. ↩ ↩² ↩³ ↩⁴

60. EMIR Article 91, first sentence ("twentieth day following that of its publication"). ↩

61. EMIR Article 7a(1), (6), and (9), third subparagraph (cap on penalty payments). ↩ ↩²

62. ESMA, "Post-trading", "Related Press & News": "ESMA consults on post-trade risk reduction services under EMIR 3" (February 26, 2026). ↩

63. EMIR Article 9(1a), first to third subparagraphs. ↩

64. EMIR Article 9(1b) to (1d). ↩

65. EMIR Article 9(1e). ↩

66. EMIR Article 9(2). ↩

67. EMIR Article 7a(3)(a) to (c) and (4), fourth subparagraph. ↩

68. EMIR Article 7a(5). ↩