AFM and DNB publish joint guidelines for EMIR 3 implementation

EMIR 3 mandates that FCs and NFCs subject to the clearing obligation and exceeding certain thresholds must hold an active account at an EU-authorized CCP. They must notify the European Securities and Markets Authorisation (ESMA) and their national competent authorities (NCAs) by 24 June 2025 with use of the ESMA format (which is already available, via this link). Banks, insurance companies and pension funds must send the notification to DNB, whilst investment firms and non-financial institutions must send the notification to the AFM

ESMA is still finalising its regulatory technical standards (RTS) on active account requirements. Meanwhile, institutions should implement provisions ensuring operational readiness, including legal documentation, IT systems, and internal processes. However, DNB and AFM will not prioritise enforcement of active account requirements dependent on the RTS until they are finalised to avoid double implementation costs for market parties.

EMIR 3 requires counterparties to seek authorisation and validation for their initial margin (IM) calculation models. DNB and AFM will follow the European Banking Authority's (EBA) opinion, delaying supervisory or enforcement actions on IM model applications until the relevant RTS are in force. Existing IM models can continue to be used after EMIR 3's implementation. FCs and NFCs, subject to the obligation to exchange IM and Article 36 of the RTS regarding non-cleared OTC derivatives, must seek authorisation for any changes to (including recalibrations) to such IM models, regardless of the materiality.

Until EBA has established its central validation function, counterparties should submit their applications to their relevant account supervisors. If multiple legal entities within a group are applying, a joint application should be submitted that includes all the entities using that same IM model.

EMIR 3 requires EU clearing members and clients that clear contracts through third-country CCPs to annually report on third-country CCP clearing activity to its NCA. Because ESMA is currently developing an RTS specifying the required information that should be reported, the first reports by counterparties are not expected until one year after the entry into force of EMIR 3.

For the sake of transparency, EMIR 3 puts amendments in place in order to ensure that clients and indirect clients have better visibility and predictability of margin calls.

CCPs are required to provide their clients with information on how their margin models work, including in stress situations, and provide them with the simulation of margin requirements under different scenarios. Until the relevant RTS have entered into force, CCPs should update their documentation to include methodologies for any add-ons.

Clients providing clearing services (in the guidance referred to as: CSPs) must provide their clients with information on potential losses are other costs they may bear. Until the relevant RTS have entered into force, CSPs should be able to leverage information already provided by CCPs and provide margin simulations based on the same scenarios as for the CCPs.