EMIR Newsflash: UK Treasury issues guidance on pension clearing exemption

One of the anomalies of Brexit in the context of EMIR is how the transitional pension scheme clearing exemption would operate in a hard Brexit scenario.

In particular, there was a concern was that an EU pension scheme, when facing a UK dealer, would not be able to benefit from a transitional clearing exemption under the UK law version of EMIR (UK EMIR). The UK Treasury has now dealt with that concern by publishing guidance in which it confirmed its intention that the transitional clearing exemption under UK EMIR will apply to both UK and EEA pension scheme arrangements.

The reverse scenario, of where a UK pension scheme faces an EU dealer in a hard Brexit scenario, remains unresolved. As things currently stand, a UK pension scheme would not benefit from the clearing exemption under EMIR when facing an EU dealer because ESMA had previously provided guidance in its Q&As that the EMIR pension clearing exemption can only apply to EU pension schemes and not to pension schemes established in third countries.