ESMA publishes preliminary findings on the Active Account Requirement and the first Annual Report of the Joint Monitoring Mechanism

What Changed

• - ESMA has published an Interim Report on the effectiveness of the Active Account Requirement, covering implementation and market impact during 2025 and early 2026, and explicitly framing this as the first stage of a two‑step effectiveness assessment
• ESMA confirms that roughly 500 entities have formally notified ESMA and national competent authorities that they are subject to the AAR, indicating that competent authorities now have a defined population of in‑scope firms for AAR supervision.
• Notified entities represent more than 90% of notional outstanding held by EU entities in relevant AAR‑scope derivatives, signalling supervisory focus on a concentrated set of high‑exposure counterparties.
• ESMA identifies early signs of increased clearing activity at EU CCPs, particularly among smaller entities, including some full relocation of positions from Tier 2 CCPs to EU CCPs for AAR‑relevant products.
• ESMA notes a gradual but limited shift in market shares from systemically important Tier 2 CCPs to EU CCPs in certain AAR‑related products, indicating that supervisors will monitor market‑share movements as a proxy for effectiveness.
• ESMA and the JMM have formalised a Joint Monitoring Mechanism as a standing cross‑sectoral framework for monitoring EU CCPs, clearing members, and clients, with an annual report describing its first year of operation in 2025.

Suggested Considerations

• Confirm whether your entity (and any funds or branches) is subject to the Active Account Requirement by assessing EMIR clearing obligation status and relevant notional clearing volumes against EMIR 3 thresholds for AAR‑scope derivatives.
• Implement and document annual stress‑testing of the active account arrangements, including at least one test per year, to evidence that positions and new trades can be shifted from Tier 2 CCPs to EU CCPs under stress scenarios.
• Map and quantify exposures to Tier 2 CCPs across AAR‑relevant derivatives, and establish an internal monitoring framework to track shifts in clearing volumes between Tier 2 CCPs and EU CCPs in line with AAR objectives.
• Align trade booking, clearing workflows, and client documentation so that the required minimum number of trades per relevant subcategory and contract class can be cleared through the EU active account on an annual average basis, taking into account representativeness requirements where applicable.
• Prepare to submit the first AAR report by 31 July 2026, ensuring that systems and controls can capture and report activity from 25 June 2025 to 30 June 2026 in accordance with ESMA’s reporting templates and instructions.
• Review and update EMIR compliance policies, clearing strategies, and risk appetite statements to reflect the supervisory focus on reducing excessive exposures to Tier 2 CCPs and leveraging EU CCP capacity, as evidenced in the Interim Report and JMM findings.

Key Dates

Who is Affected