On February 3, 2015, the European Commission published a report on the progress made by CCPs in developing technical solutions for the transfer by pension schemes of non-cash collateral as variation margin. Under the European Market Infrastructure Regulation (“EMIR”) pension schemes that meet certain requirements are exempt from the clearing obligation for a temporary period. The exemption was included in EMIR to provide CCPs with time to develop solutions for the transfer of non-cash collateral by pension schemes to meet variation margin calls. CCPs require highly liquid collateral, mostly cash, as variation margin, but pension schemes are not set up to hold large amounts of cash and would have to amend their business model at high costs to do so. The exemption period may be extended under EMIR to provide CCPs with further time to develop solutions. The Commission’s report assesses the progress made by CCPs to develop solutions and concludes that not enough progress has been made and that imposing the clearing obligation on pension schemes would adversely effect the retirement benefits of future pensioners. The Commission therefore intends to extend the exemption period for a further two years by adopting a Delegated Act.

The Commission’s report is available at: http://ec.europa.eu/finance/financial-markets/docs/derivatives/150203-report_en.pdf