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Version date: 31 March 2015 - onwards

OTC Question 16: Pension Scheme exemption from the clearing obligation [last update 31 March 2015]

 Articles 2(10) and 89 of EMIR

Pension Scheme exemption from the clearing obligation - Article 2(10) and 89 of EMIR

(a) If a pension scheme relies on the temporary 3 year exemption from the Clearing Obligation stated in Article 89(1) of EMIR, and that the exemption is not extended after 3 years, which OTC derivative contracts will such pension scheme have to clear after expiry of the exemption?

(b) What is the timing and application of the "primary purpose" of providing retirement benefits test in Art. 2(10)(d) of EMIR for pension schemes eligible and benefiting from a clearing exemption? Should it be considered only at the time the transaction is entered into or on an ongoing basis?

(c) If pension scheme arrangements, as defined in Article 2(10) EMIR are granted an exemption under Article 89 and outsources management of its assets to a third party, either by way of delegation or through the purchase of a third party managed vehicle, will the assets still benefit from that exemption?

OTC Answer 16

(a) In accordance with the second paragraph of Article 89(1), the OTC derivative contracts entered into during the temporary exemption are not subject to the clearing obligation. Therefore only new contracts entered into after expiry of the exemption would have to be cleared.