EU EMIR: Margin exemption for single-stock equity and index options

On 20 December 2023, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), collectively known as the three European Supervisory Authorities (ESAs), published joint draft regulatory technical standards (RTS) proposing to extend the temporary exemption from the EMIR bilateral margining requirements for single-stock equity and index options by a further two years to 4 January 2026.

The ESAs acknowledged the practical difficulty for the proposed RTS to be processed by the European Commission before the expiry of the existing temporary exemption on 4 January 2024. They have issued a no-action Opinion proposing that:

• the Commission prioritise the decision relating to the adoption of the draft RTS; and
• from 4 January 2024 until the entry into force or rejection of the proposed RTS or the adoption of any long-term solution in the context of EMIR 3.0, whichever occurs first, the competent authorities should not prioritise any supervisory or enforcement action in relation to the requirements set out in Article 11 of Regulation 648/2012 as specified in Articles 9 to 18, points (c), (d) and (f) of Article 19(1), Article 19(3) and Article 23 of Regulation 2016/2251 in respect of equity options.

The equivalent temporary exemption under UK EMIR was also set to expire on 4 January 2024 but was extended by a further two years earlier this week – see our article here.