ESMA has launched a Discussion Paper to prepare the Regulatory Technical Standards (RTS) which will implement provisions of the European Markets Infrastructure Regulation (EMIR) regarding the obligation to centrally clear OTC derivatives. The consultation is aimed at assisting ESMA in developing its approach in determining which classes of OTC derivatives need to be centrally cleared and the phase-in period for the counter parties concerned. EMIR introduced provisions to improve transparency, establish common rules for central counter parties (CCPS) and for trade repositories (TRS) and to reduce the risks associated with the OTC derivatives market. It provides for the obligation to centrally clear OTC derivatives contracts or to apply risk mitigation techniques such as the exchange of collateral.