FAQ – EMIR 3.0 AAR Operational Conditions

This FAQ on the Operational Conditions under the EMIR Active Account Requirement (AAR) provides answers to key questions market participants may have. It covers what internal systems and arrangements are needed to manage shifts in positions and trade flows, what needs to be demonstrated through stress testing and how often it should be conducted, and how to obtain written confirmations from EU CCPs. 

As part of the Operational criteria conditions (b) and (c) (ESMA Final Report on the EMIR AAR), market participants must demonstrate they have internal systems and arrangements to monitor and support a large shift in positions and new trade flow under different scenarios. What do market participants need to do? 

Based on the requirements, affected market participants need to: ​ 

• have internal systems to monitor exposure and internal arrangements to support a large flow of transactions from positions held at Tier 2 CCPs under different scenarios, including the assessment of any legal or operational barriers to this effect;​ 

• have the necessary human resources to support the proper functioning of the clearing arrangement at all times, including large shifts of positions held at Tier 2 CCPs or new trades;​ 

• provide a written confirmation that their EU CCP has the capacity to clear within 1 month either 3 x the gross notional value cleared by the EU CCP or the total gross notional cleared by both the EU and Tier 2 CCPs for the in-scope contracts across all clearing members for the previous 12 months;​ 

• provide a written confirmation that either itself or its clearing service provider has the capacity to clear within 1 month either 3 x the gross notional cleared on the counterparty’s account or the counterparty’s total gross notional value cleared for the previous 12 months.​ 

ESMA’s final guidance refers to two separate certifications and allows for the provision of these confirmations electronically. In addition, EU CCPs can make these confirmations publicly or readily available to all relevant market participants.​ 

What about stress-testing these conditions? 

According to the guidance, market participants need to ensure that operational tests are conducted to demonstrate that their account has the capacity to withstand the activity increase under the operational conditions b) and c).  

The operational tests must be performed on an annual basis for all in-scope participants.  

ESMA’s final report doesn’t provide precise details on how these tests should be run. In any case, Eurex is committed to supporting the market and will look to market participants for guidance on the testing and confirmation solutions required by them. 

How will affected members obtain the required written confirmation from their EU CCP (e.g., Eurex)? 

Eurex will issue a certificate confirming that the CCP has the capacity to handle a threefold increase in clearing activity. This certificate will be made available directly on the Eurex website, removing the need for individual requests from participants. 

When will the written statement be made available for download from the Eurex website? 

Eurex will make the statement available as soon as practically possible. This will likely be after the final RTS completes the endorsement process and officially enters into force, incorporating references to the official legal text as published in the EU’s Official Journal. 

Will Eurex confirm to regulators that a market participant has passed the annual operational test? 

Eurex provides daily summary reporting in the simulation environment. However, Eurex will not evaluate whether a participant has successfully participated in any operational tests and will not notify regulators to confirm participants’ compliance. This would not be practical as Eurex does not have full visibility of the overall portfolio and the derived stress-testing requirements of a participant. 

Are trade venues required to participate in stress testing simulations? 

No, trade venues are under no regulatory obligation to participate in stress testing simulations. However, affected market participants and their clearing members must ensure that all necessary technical setups are in place with the relevant trading venues in advance. This coordination is essential, as there are no alternative channels through which Eurex can receive trades during simulation.