EMIR 3: Simplification and Burden Reduction in Action?

We consider the EU’s Simplification and Burden Reduction agenda under EMIR 3. While there may be rewards ahead for the EU derivatives industry, expectations need to be managed. Improvements will be gradual, as many Level 2 rules are still under construction. Our Financial Services team explains why careful planning and surveillance will be key for firms navigating these changes.

What you need to know

• The EU’s Simplification and Burden Reduction agenda is shaping reforms across financial regulatory packages including EMIR 3
• Some reliefs may emerge for the EU derivatives industry, particularly around reporting obligations
• However, expectations need to be managed as the Level 2 and 3 framework continues to evolve

The era of simplification and burden reduction (SBR) is now in full swing in the world of EU financial regulation. Throughout 2025, we have seen priorities like regulatory streamlining, proportionality, convergence and relief from reporting burdens permeating the work plans of EU legislators and supervisory authorities. These ambitions go hand-in-hand with the EU’s growth and competitiveness mandates post-Draghi, unveiled in strategies such as:

• The ‘Competitiveness Compass'
• The Single Market Strategy
• The Savings and Investments Union

The EU derivatives community needs to pay close attention to key areas where the SBR agenda may influence revised European Market Infrastructure Regulation (EMIR) obligations.

Simplification and EMIR 3

The European Securities and Markets Authority (ESMA) has said it expects EMIR 3 reforms to advance simplification and strengthen the regulatory framework by:

• Accelerating product and model authorisation timelines, particularly for non-material changes
• Introducing a centralised data platform – a one-stop interface to significantly reduce administrative burden and facilitate seamless interaction between central counterparties (CCPs) and regulators
• Standardising and simplifying application and review procedures, to reduce procedural complexity across the CCP Supervisory Committee and supervisory colleges

SBR in perspective: ‘This is not about deregulation’

In its recently published 2026 Work Programme, ESMA said it is integrating principles of SBR into all new upcoming policy mandates, including EMIR 3. However, simplification is not a zero-sum game. ESMA wants to ‘strike the right balance’ between robust supervision and practical simplification and cautions ‘this is not about de-regulation’. Expectations about the rewards of simplification need to be managed accordingly. As Level 2 and 3 measures emerge over the next two years, they will need to be reviewed with a clear head to properly assess the real-world benefits of so-called SBR reforms.

What’s on the horizon?

ESMA is understood to be hard at work on an ambitious portfolio of Level 2 and 3 measures, which it intends to submit to the European Commission (EC) by 25 December 2026. Similarly, the EC will need to scrutinise and consider adopting ESMA’s proposals to bring to life the final architecture of the EMIR 3 reform package. Future watch-items include:

1. 𝗙𝗶𝗻𝗮𝗹𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗥𝗧𝗦 𝗼𝗻 𝗔𝗰𝘁𝗶𝘃𝗲 𝗔𝗰𝗰𝗼𝘂𝗻𝘁 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁 (𝗔𝗔𝗥): The EC adopted a much-anticipated set of regulatory technical standards (RTS) on the AAR under EMIR 3 in October this year. The AAR requires certain EU counterparties to maintain and use at least one active account at EU CCPs and to clear at least a representative number of trades in this account. This is referred to as the ‘representativeness obligation’. Notably, the EC did not modify ESMA’s draft RTS, which proposed numerous streamlining measures for operational conditions and the representativeness obligation. In particular, the EC noted that the reporting burden had been ‘drastically reduced’. If the Council and European Parliament do not object, these RTS will be published in the Official Journal in due course and will enter into force 20 days later.
2. 𝗙𝗶𝗻𝗮𝗹𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗥𝗧𝗦 𝗼𝗻 𝗖𝗖𝗣 𝗮𝘂𝘁𝗵𝗼𝗿𝗶𝘀𝗮𝘁𝗶𝗼𝗻𝘀, 𝗲𝘅𝘁𝗲𝗻𝘀𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝘃𝗮𝗹𝗶𝗱𝗮𝘁𝗶𝗼𝗻𝘀: ESMA published two final reports on 9 October containing draft RTS building on feedback received following public consultation. ESMA connects its proposals to the goals of simplification, proportionality and reduced burdens for CCPs. These involve ‘revised and shortened timelines and procedures’ for applications by EU CCPs for initial (and extension of) authorisation, and applications for validations of changes to models and parameters.
3. 𝗙𝗶𝗻𝗮𝗹𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗥𝗧𝗦 𝗼𝗻 𝗽𝗮𝗿𝘁𝗶𝗰𝗶𝗽𝗮𝘁𝗶𝗼𝗻 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀: ESMA also launched a consultation on 9 October 2025, which contained draft RTS on the elements to be considered when CCPs define participation requirements under EMIR 3. Again, values like consistency, simplicity and the avoidance of disproportionate burdens are evident in the accompanying cost-benefit analysis.
4. 𝗙𝗶𝗻𝗮𝗹𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗥𝗧𝗦 𝗼𝗻 𝗜𝗠𝗠𝗩: The EBA issued a ‘no action letter’ in December 2024 delaying enforcement of requirements concerning Initial Margin Model Validation (IMMV) until technical standards are finalised. The EBA submitted draft RTS to the EC in July 2023, which have yet to be adopted.
   While the ‘no action letter’ remains in force, on 7 November 2025, the EBA launched a data collection exercise to obtain the list of EU CCPs that will need to apply to the EBA for validation of ‘ISDA SIMM’. The EBA noted that relevant financial and non-financial counterparties should apply to their competent authorities for the authorisation of these models.
5. 𝗗𝗲-𝗽𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘀𝗲𝗱 𝗘𝗖 𝗱𝗲𝗹𝗶𝘃𝗲𝗿𝗮𝗯𝗹𝗲𝘀: The EC recently announced it would be stalling work on certain ‘non-essential’ deliverables, including several EMIR Level 2 acts. These will now not be adopted before 1 October 2027. The EC described the de-prioritisation exercise as a ‘simplification effort’.
6. 𝗥𝗲𝗽𝗼𝗿𝘁 𝗼𝗻 𝘁𝗵𝗲 𝗵𝗼𝗹𝗶𝘀𝘁𝗶𝗰 𝗿𝗲𝘃𝗶𝗲𝘄 𝗼𝗳 𝘁𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝗮𝗹 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴: Linked to the SBR agenda, ESMA launched a call for evidence back in June 2025 on the simplification of financial transaction reporting under EMIR, MiFIR and SFTR. The consultation closed on 19 September 2025. ESMA plans to deliver a report on proposals in Q2 2026.
7. 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻 𝗼𝗳 𝗘𝗠𝗜𝗥 𝟯 𝗔𝗺𝗲𝗻𝗱𝗶𝗻𝗴 𝗗𝗶𝗿𝗲𝗰𝘁𝗶𝘃𝗲: Member States are required to transpose the EMIR 3 Amending Directive by 25 June 2026. Ireland has not yet published transposing legislation. Therefore, close attention to upcoming government legislative programmes will be important.

Conclusion

The EU’s EMIR 3 reforms go some way towards evidencing the EU’s intention to advance simplification and burden reduction in derivatives regulation. While there are signs of potential relief, industry participants need to approach these developments with objectivity. Many measures are still awaiting adoption, and the actual operational impact may be limited or phased-in over time. While there may be efficiencies ahead, careful monitoring and realistic expectations are essential.

For more information and expert advice on these reforms, please contact a member of our Financial Services team.

This content was contributed by Barbara Parnell, Knowledge Lawyer.

The content of this article is provided for information purposes only and does not constitute legal or other advice.