EU EMIR 3: AAR Representativeness Obligation

On 20 February 2026, ESMA published a supervisory briefing on the representativeness obligation which forms part of the active account requirement under EU EMIR 3 (AAR). The supervisory briefing aims to clarify how aspects of compliance with the representativeness obligation should be performed and reported by in-scope counterparties in accordance with EU EMIR and Commission Delegated Regulation (EU) 2026/305 (the AAR RTS) (see our article on the AAR RTS here).

Summary

The supervisory briefing:

• clarifies the process for identifying the most relevant subcategories for the purposes of the AAR representativeness obligation (section 3.1);
• explains how to report on representativeness compliance for the purposes of Article 9 and Annex III of the AAR RTS (section 3.2); and
• provides a worked example of compliance with the representativeness reporting requirements (section 3.3).

The supervisory briefing is primarily directed to national competent authorities (NCAs) as it seeks to provide guidance and promote supervisory convergence in the supervision of relevant counterparties.

However, it is also essential reading for counterparties subject to the AAR, and, in particular, the representativeness obligation.

Implications for the buy-side

All financial counterparties (FCs) and non-financial counterparties (NFCs) that are directly subject to EU EMIR should have processes in place to determine, on a continuous basis, whether they are subject to AAR and, if so, whether AAR includes the representativeness obligation (more on this below).

In the case of AIFs¹, note that the FC definition captures AIFs established in the EU and non-EU AIFs (e.g. Cayman funds) if the non-EU AIFs are managed by AIFMs authorised or registered in accordance with AIFMD.

Broadly, FCs and NFCs will be subject to the AAR if they are, or become, subject to the EU EMIR clearing obligation (FC+ and NFC+) and exceed the clearing threshold (currently EUR 3 billion gross notional value) in any of the following categories:

• interest rate derivatives denominated in Euro or Polish zloty;
• short-term interest rate (STIR) derivatives denominated in euro,

(the AAR categories).

A counterparty belonging to a group subject to consolidated supervision in the EU is required to consider all derivative contracts in AAR categories that are cleared by the counterparty or by other entities within its group, except for intragroup transactions.

The representativeness obligation applies only to a subset of FCs and NFCs subject to AAR, based on a threshold of EUR 6 billion of notional clearing volume outstanding in derivative contracts in AAR categories. ESMA's final report on the AAR indicated that, for groups subject to consolidated supervision in the EU, this should also be considered at group level.

FCs and NFCs that are, or become, subject to AAR must ensure that they comply with the relevant requirements, including the representativeness obligation and associated reporting requirements, where applicable.

Next steps

The representativeness obligation is a particularly complex and challenging requirement, presenting in-scope counterparties with significant compliance obligations. We recommend reviewing the supervisory briefing carefully and making any necessary updates to EU EMIR processes and procedures.

This article provides a high-level summary of the AAR and representativeness obligation scoping, and does not address the calculations or compliance requirements in detail. If you would like to discuss AAR, the representativeness obligation, or any other aspect of EU EMIR 3 in greater depth, please do not hesitate to contact us.

^{1 With the exception of AIFs set up exclusively for the purposes of serving one or more employee share purchase plans and AIFs which are certain securitisation special purpose entities.}