OSTTRA granted exemptions on mandatory clearing obligations
08 July 2025 UK
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OSTTRA services have been granted exemptions from mandatory clearing obligations under the European Market Infrastructure Regulation (EMIR) by the European Securities and Markets Authority (ESMA).
In addition, it is granted exemption from the public reporting requirements under Markets in Financial Instruments Regulation (MiFIR) by the UK’s Financial Conduct Authority (FCA).
According to the firm, OSTTRA triBalance is currently the only provider in the EU approved to carry out post-trade risk reduction services under a clearing exemption.
The FCA’s exemption from the Derivatives Trading Obligation (DTO) removes an obligation from UK-based users of OSTTRA’s Post Trade Risk Reduction (PTRR) services.
EU-based users currently benefit from the equivalent exemptions that came into force with EU MiFIR 3 in 2024.
The clearing obligation was designed to reduce systemic risk by mandating central clearing for certain derivatives, however, the EMIR clearing obligation prevented the use of vanilla swaps for portfolio rebalancing.
With the exemption now in place, the OSTTRA service can better optimise risk reduction through a more liquid and widely traded contract, the firm says, marking a significant milestone in OSTTRA’s efforts to expand the use of post-trade risk reduction services.
Swaptions were used as a proxy, but these more complex and costly instruments limited the wider adoption of portfolio rebalancing, says OSTTRA.
This reduced the broader benefits of multilateral participation, preventing widespread reduction of counterparty risk in the financial system, the firm explains. The exemptions from ESMA will better enable OSTTRA to support a wider set of market participants.
A similar decision from the Bank of England’s Prudential Regulation Authority (PRA) is under consideration — another key step towards enabling broader market participation.
Work is also underway to facilitate similar exemptions from the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) for equivalent rules in the US under the Dodd-Frank Act.
Kirston Winters, head of legal, risk, compliance and government and regulatory affairs at OSTTRA, says: “This is an important development for our clients, who rely on our services to reduce risk in their portfolios.
“These exemptions allow us to deliver more efficient and accessible optimisation services, reducing operational complexity and enabling broader participation in multilateral risk reduction — ultimately strengthening the resilience of the financial system. We’re working closely with other regulators to provide additional exemptions, which will further enable firms to use post-trade risk reduction services.”
In addition, it is granted exemption from the public reporting requirements under Markets in Financial Instruments Regulation (MiFIR) by the UK’s Financial Conduct Authority (FCA).
According to the firm, OSTTRA triBalance is currently the only provider in the EU approved to carry out post-trade risk reduction services under a clearing exemption.
The FCA’s exemption from the Derivatives Trading Obligation (DTO) removes an obligation from UK-based users of OSTTRA’s Post Trade Risk Reduction (PTRR) services.
EU-based users currently benefit from the equivalent exemptions that came into force with EU MiFIR 3 in 2024.
The clearing obligation was designed to reduce systemic risk by mandating central clearing for certain derivatives, however, the EMIR clearing obligation prevented the use of vanilla swaps for portfolio rebalancing.
With the exemption now in place, the OSTTRA service can better optimise risk reduction through a more liquid and widely traded contract, the firm says, marking a significant milestone in OSTTRA’s efforts to expand the use of post-trade risk reduction services.
Swaptions were used as a proxy, but these more complex and costly instruments limited the wider adoption of portfolio rebalancing, says OSTTRA.
This reduced the broader benefits of multilateral participation, preventing widespread reduction of counterparty risk in the financial system, the firm explains. The exemptions from ESMA will better enable OSTTRA to support a wider set of market participants.
A similar decision from the Bank of England’s Prudential Regulation Authority (PRA) is under consideration — another key step towards enabling broader market participation.
Work is also underway to facilitate similar exemptions from the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) for equivalent rules in the US under the Dodd-Frank Act.
Kirston Winters, head of legal, risk, compliance and government and regulatory affairs at OSTTRA, says: “This is an important development for our clients, who rely on our services to reduce risk in their portfolios.
“These exemptions allow us to deliver more efficient and accessible optimisation services, reducing operational complexity and enabling broader participation in multilateral risk reduction — ultimately strengthening the resilience of the financial system. We’re working closely with other regulators to provide additional exemptions, which will further enable firms to use post-trade risk reduction services.”
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