ESMA outlines conditions for ptrr services exemption under EMIR 3

The European Securities and Markets Authority has opened a targeted consultation that will shape how ptrr services operate under the updated EMIR 3 clearing framework.

ESMA launches consultation on post-trade risk framework

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, announced on 26/02/2026 a new consultation on the requirements governing post-trade risk reduction (PTRR) services. The consultation addresses how these services can benefit from a conditioned exemption from the clearing obligation introduced under the European Market Infrastructure Regulation (EMIR 3).

ESMA aims to clarify the operational and risk management standards that must be met before firms can rely on this exemption. Moreover, the regulator wants to ensure that market participants understand how the framework applies to different over-the-counter (OTC) derivative activities in practice.

Scope of the consultation and key requirements

ESMA is seeking feedback on several core elements of the framework that will apply to PTRR service providers operating under the exemption. In particular, the consultation covers transparency obligations towards participants, the design of algorithm safeguards, how PTRR exercises are executed, the controls that must be performed, and the standards for record keeping.

Furthermore, the consultation explains how regulatory monitoring should be conducted by the relevant authorities once the exemption regime is in place. That said, ESMA stresses that supervisory oversight must remain robust so that the new framework does not weaken post-trade risk controls.

Draft RTS for OTC derivatives and PTRR activities

The draft Regulatory Technical Standards (RTS) published by ESMA set out the detailed conditions that PTRR services must meet for OTC derivative transactions to qualify for the exemption from the clearing obligation. These RTS define the rts requirements for ptrr in a way that aligns with the broader EMIR 3 risk mitigation objectives.

In particular, the standards focus on three main service types currently used in the market: compression, portfolio rebalancing and basis risk optimisation. However, ESMA also acknowledges that market practices may evolve and that the framework should remain sufficiently flexible to accommodate future developments in post-trade risk reduction services.

Preventing circumvention of the clearing obligation

The RTS are explicitly designed to ensure that the exemption is not misused to circumvent the mandatory clearing obligation. Therefore, the texts incorporate safeguards so that only genuine post trade risk reduction services qualify, and that related trades are tightly linked to risk-reducing objectives rather than speculative activity.

Moreover, ESMA highlights that the rules also pursue simplification and burden reduction for market participants. To achieve this, the authority intends to leverage existing market practices and infrastructures that have emerged since the start of the EMIR 3 regime, instead of introducing entirely new processes.

Operational expectations for service providers

Under the proposed framework, providers of ptrr services would need to implement clear algorithm controls, robust testing procedures and strong governance over their execution processes. However, ESMA also emphasizes the importance of comprehensive records, enabling authorities to reconstruct PTRR exercises and assess compliance with the exemption conditions.

Additionally, ESMA’s consultation notes that transparency towards participants should allow firms to understand how their positions are affected by each PTRR exercise. This includes information on risk outcomes, pricing methodologies and how the compression portfolio rebalancing or other techniques impact overall exposures.

Supervisory monitoring and next steps

The consultation sets out expectations for how regulatory monitoring authorities should oversee the use of the exemption and the associated PTRR activities. In particular, supervisors are expected to monitor patterns in OTC derivative transactions to ensure that the framework remains aligned with EMIR’s clearing and risk-reduction goals.

Stakeholders are invited to provide feedback on the proposals set out in the consultation by 20 April 2026. After reviewing the responses, ESMA plans to finalise the RTS and submit the draft standards to the European Commission in Q4 2026. Moreover, once adopted, the new regime will define how PTRR-related exemptions interact with existing clearing and reporting requirements across the EU.

In summary, ESMA’s consultation on PTRR under EMIR 3 aims to balance risk reduction, market efficiency and regulatory safeguards, ensuring that post-trade tools support financial stability without undermining the clearing obligation.