ESMA advises fresh postponement of pension fund central clearing duty
The EU financial markets watchdog has recommended the European Commission extend until June 2022 the current exemption for pension funds from the obligation to use central clearing for derivatives.
Its stance follows a public consultation to collect more data as well as views from a wide range of stakeholders about issues surrounding potential central clearing solutions for pension schemes.
ESMA said it was convinced of the benefits of a broad adoption of the clearing obligation for pension funds, but that “the additional efforts needed for implementing the solutions (…) and ensuring readiness may still require additional time”.
A one-year extension would therefore be beneficial, it said. For several years pension schemes have been exempt from a central clearing obligation as they could face difficulties providing cash as collateral – known as the variation margin – related to cleared derivative contracts, with the latest extension of this exemption running until June 2021.
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