Pension Funds

1. EMIR requirements: clarification in the updated ESMA Q&A

Implementation of the Regulation (EU) 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) ESMA/2015/775 (the "Q&A").

ESMA updated its Q&A on 31 March 2015 and 27 April 2015. In particular, the Q&A sheds some light on the conditions regarding intra-group transactions and pension scheme arrangements' transitional exemptions from the clearing obligation - in questions 6, 13 and 16.

More specifically, ESMA clarifies that the exemption is granted to the pension scheme arrangements, in consideration of the nature of the activity, therefore the fact that the assets are not managed wholly and directly by the pension scheme arrangement does not prejudice the status of that exemption. ESMA further clarifies when a third party asset manager manages assets from an exempted pension scheme arrangement, it should comply with the following conditions:

  • it does not comingle exempt and non-exempt assets;
  • the derivative contract clearly identifies that it is concluded for an exempt pension scheme;
  • it should keep the assets and records in a way to allow regulators to check that the derivative contract reduces investment risks directly related to the financial solvency of the pension scheme.