What changed between the plenary report and the adopted text

Removed:(b) an OTC derivative contract entered into with another counterparty where both counterparties are part of the same institutional protection scheme, referred to in Article 113(7) of Regulation (EU) No 575/2013, provided that the condition set out in point (a)(ii) of this paragraph is met;

Removed:(c) an OTC derivative contract entered into between credit institutions affiliated to the same central body or between such credit institution and the central body, as referred to in Article 10(1) of Regulation (EU) No 575/2013;

Removed:(d) an OTC derivative contract entered into with a non-financial counterparty which is part of the same group, provided both the following conditions are met:

Removed:(a) both counterparties to the derivative contract are included in the same consolidation on a full basis and are subject to an appropriate centralised risk evaluation, measurement and appropriate control procedures;

Removed:(b) the non-financial counterparty is established in the Union or, if it is established in a third-country, that third country is not listed under paragraphs 4 and 5.

Removed:3. For the purposes of this Article, counterparties shall be considered included in the same consolidation when they are both any of the following:

Removed:(a) included in a consolidation in accordance with Directive 2013/34/EU or International Financial Reporting Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002 or, in relation to a group the parent undertaking of which has its head office in a third country, in accordance with generally accepted accounting principles of a third country determined to be equivalent to IFRS in accordance with Regulation (EC) No 1569/2007 or accounting standards of a third country the use of which is permitted in accordance with Article 4 of that Regulation;

Removed:(b) covered by the same consolidated supervision in accordance with Directive 2013/36/EU or, in relation to a group the parent undertaking of which has its head office in a third country, the same consolidated supervision by a third-country competent authority verified as equivalent to that governed by the principles laid down in Article 127 of Directive 2013/36/EU.

Removed:4. For the purposes of this Article, transactions with counterparties established in any of the following third countries shall not benefit from any of the exemptions for intragroup transactions:

Removed:(a) where the third country is listed as a high-risk third country that has strategic deficiencies in its regime on anti-money laundering and counter terrorist financing, in accordance with Article 9 of Directive (EU) 2015/849 of the European Parliament and of the Council*1;

Removed:(b) where the third country is listed in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes*2 and their subsequent updates which are specifically approved twice a year, customarily in February and October, and published in series C of the Official Journal of the European Union.

Removed:For the purposes of this paragraph, a third country that has been continuously mentioned in Annex II to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes for a period of at least three years shall be considered to be listed in Annex I to those conclusions.

Removed:5. Where appropriate in the light of the legal, supervisory and enforcement arrangements of a third country with regard to risks, including counterparty credit risk and legal risk, the Commission is empowered to adopt delegated acts in accordance with Article 82 to supplement this Regulation to identify the third countries whose entities may not benefit from any of the exemptions for intragroup transactions despite not being listed pursuant to paragraph 4.

Removed:___________________________________________________

Removed:*1 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).’

Removed:*2 Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes and the Annexes thereto (OJ C 413 I, 12.10.2021, p. 1).;

Removed:(2) in Article 4(1), the following subparagraph is added:

Removed:‘The obligation to clear all OTC derivative contracts does not apply to contracts concluded in situations as referred to in the first subparagraph, point (a)(iv), between, on one side, a financial counterparty that meets the conditions set out in Article 4a(1), second subparagraph, or a non-financial counterparty that meets the conditions set out in Article 10(1), second subparagraph, and, on the other side, a pension scheme arrangement established in a third country and operating on a national basis, provided that such entity or arrangement is authorised, supervised and recognised under national law and where its primary purpose is to provide retirement benefits and is exempted from the clearing obligation under its national law.’;

Removed:(3) ▌Article4a is amended as follows:

Removed:(a) paragraph 1 is replaced by the following:

Removed:‘1. Every 12 months, a financial counterparty taking positions in OTC derivative contracts may calculate its aggregate month-end average position in uncleared contracts for the previous 12 months in accordance with paragraph 3.

Removed:Where a financial counterparty does not calculate its positions, or where the result of the calculation of its aggregate month-end average position in uncleared contracts for the previous 12 months exceeds any of the clearing thresholds specified pursuant to Article 10(4), point (b), or where the result of the calculation of its aggregate month-end average position in OTC contracts for the previous 12 months exceeds any activity threshold specified pursuant to Article 10(4), point (b), the financial counterparty shall:

Removed:(a) immediately notify ESMA and the relevant competent authority thereof;

Removed:(b) establish clearing arrangements within four months of the notification referred to in point (a) of this subparagraph; and

Removed:(c) become subject to the clearing obligation referred to in Article 4 for all OTC derivative contracts pertaining to any class of OTC derivatives that is subject to the clearing obligation entered into or novated more than four months after the notification referred to in point (a) of this subparagraph.’;

Removed:(b) in paragraph 3, the first subparagraph is replaced by the following:

Removed:‘In calculating the aggregate month-end average positions in uncleared contracts referred to in paragraph 1, the financial counterparty shall include all OTC derivative contracts that are not cleared in a CCP authorised under Article 14 or recognised under Article 25, entered into by that financial counterparty or entered into by other entities within the group to which that financial counterparty belongs.’;

Removed:(3a) the following article is inserted:

Removed:‘Article 4aa

Removed:Exemption from clearing obligation for post-trade risk reduction services

Removed:1. Without prejudice to risk-mitigation techniques under Article 11, Article 4(1) shall not apply to OTC derivative contracts that initiated and concluded as the result of a post-trade risk reduction services exercise where agreed by both parties to the transaction.

Removed:2. Post-trade risk reduction transactions shall only be exempted from the clearing obligation under Article 4 where the post-trade risk reduction service provider and each participant in the post-trade risk reduction exercise comply with the requirements laid down in this Article.

Removed:3. A post-trade risk reduction exercise shall meet all of the following conditions:

Removed:(a) be performed by an entity independent of the counterparties to the OTC derivative contracts included in the exercise;

Removed:(b) be market risk neutral;

Removed:(c) not contribute to price formation;

Removed:(d) take the form of a compression, rebalancing or optimisation;

Removed:(e) be executed on a bilateral or multilateral basis;

Removed:(f) achieve a reduction in the counterparty credit risk in each of the portfolios submitted to the exercise;

Removed:(g) be either accepted or rejected in its entirety with the result that the participants to the exercise are not able to choose which trades to execute under the exercise;

Removed:(h) be open for participation only to the entities initially submitting a portfolio to the exercise.

Removed:4. A post-trade risk reduction service shall be provided by entities authorised in accordance with Directive 2014/65/EU(PTRR service provider).

Removed:In providing post-trade risk reduction services, a PTRR service provider shall:

Removed:(a) observe pre-agreed rules, methods and algorithms in pre-scheduled cycles and in a reasonable, transparent and non-discriminatory manner;

Removed:(b) ensure that entities participating in a post-trade risk reduction exercise have no influence over the result of the exercise;

Removed:(c) in order to prevent a build-up of transactions in portfolios, conduct portfolio compression after every post-trade risk reduction exercise that results in new transactions;

Removed:(d) keep records of all transactions executed pursuant to a post-trade risk reduction exercise, including:

Removed:(i) information on transactions entered within the exercise,

Removed:(ii) transactions resulting from the exercise either as modified transactions or as new transactions, and

Removed:(iii) the overall change in the risk of the different portfolios included in the exercise; and

Removed:(e) monitor the transactions resulting from the post-trade risk reduction exercise in order to ensure, to the extent possible, that the post-trade risk reduction exercise does not result in any misuse or circumvention of the clearing obligation.

Removed:5. The competent authority that authorised the PTRR service provider shall notify ESMA of the authorisation. ESMA shall publish and maintain a list of all authorised PTRR service providers in the Union.

Removed:The competent authority that authorised the PTRR service provider shall, on a yearly basis, confirm that that PTRR service provider complies with the requirements laid down in paragraph 4.

Removed:Where a PTRR service provider no longer complies with the requirements laid down in paragraph 4, the competent authority may withdraw its authorisation.

Removed:6. Before entities begin using the clearing exemption for post-trade risk reduction transactions referred to in paragraph 1, they shall notify their respective competent authorities, providing them with a description of the type of post-trade risk reduction exercise they plan to use and a written explanation of how the conditions set out in paragraphs 3 and 4 are complied with on an ongoing basis. The use of the notified type of post-trade risk reduction exercise and the clearing exemption for the relevant post-trade risk reduction transactions shall be deemed approved unless the notified competent authority informs the entity it supervises that it does not validate the use of the exemption within 30 calendar days of the date of the receipt of the notification. Competent authorities shall notify ESMA of any entity having been validated to participate in post-trade risk reduction exercises or having its validation withdrawn by the authority.

Removed:7. ESMA shall develop draft regulatory technical standards to further specify the conditions set out in paragraphs 3 and 4, including aspects such as market neutrality in the PTRR exercise, the type of transactions which can be included in a PTRR exercise and benefit from an exemption from the clearing obligation, the requirements of the management of the PTRR exercise and how to monitor the correct application of the exemption granted, ensuring the clearing obligation is not circumvented. ESMA shall submit those draft regulatory technical standards to the Commission by ... [12 months from the date of entry into force of this amending Regulation].

Removed:Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.’

Removed:(3 b) in Article 6(2), the following point is added:

Removed:‘(fa) the clearing rate for derivatives contracts concluded in the Union, on aggregate basis and for different asset classes;’

Removed:(4) the following Articles 7a and 7b are inserted: