The Malta Financial Services Authority (MFSA) has issued a circular summarizing a number of recent European Securities and Markets Authority (ESMA) publications and consultations relating to Regulation (EU) 2024/2987 (EMIR 3).
1. ESMA Supervisory Briefing on the AAR Representativeness Obligation
The supervisory briefing aims to promote uniformity across Member States and ensure consistent application of Average Account Return (AAR) disclosure requirements. Under the Contract For Difference (CFD) product intervention measures, firms must publish the percentage of retail client accounts that incur losses. The AAR metric was introduced to make these disclosures fair, clear and reflective of actual client outcomes.
ESMA provides guidance to national competent authorities on assessing firms’ compliance with the AAR representativeness obligation, covering expectations around the calculation, presentation and periodic review of AAR metrics. Firms are required to use a robust and transparent methodology, rely on a representative retail client sample, ensure that disclosures reflect the correct reference period, and avoid marketing communications that obscure required risk warnings. They must also maintain strong governance, internal controls and documentation to evidence compliance. The MFSA will integrate these standards into its authorisation and supervisory work and may request gap analyses and remediation evidence where necessary.
2. ESMA Statement on Firms’ Obligations under CFD Product Intervention Measures amid Rising Offerings of Perpetual Futures
In this statement ESMA has reminded firms that the existing CFD product intervention rules also apply to the growing trend of offering “perpetual futures” to retail clients. Because these instruments can share similar features and risks to CFDs, ESMA warns that firms must not evade regulatory requirements through product design, naming or marketing. Depending on their characteristics, perpetual futures may fall within the scope of the CFD framework, and firms must comply fully with the applicable obligations.
ESMA reiterates that firms must fully comply with all CFD product intervention requirements. These include respecting retail leverage limits, providing margin closeout and negative balance protection, prohibiting both monetary and nonmonetary incentives, and ensuring the inclusion of all prescribed risk warnings. Firms must also adhere to MiFID II product governance rules, ensuring that products are designed and distributed in line with clients’ needs and risk profiles. Moreover, ESMA reminds firms that they are responsible for carrying out a thorough legal and regulatory assessment of any financial instruments they manufacture or distribute, taking into account their true economic substance and risk characteristics.
3. Final Report on the draft technical standards amending Regulation (EU) 149/2013 to further detail the new EMIR clearing thresholds regime
ESMA has issued its Final Report on the draft Regulatory Technical Standards (RTS) revising the clearing thresholds under Regulation (EU) 149/2013, reflecting changes introduced by EMIR 3. Under the new regime, clearing thresholds will no longer distinguish between exchange traded and OTC derivatives. Instead, they will be based on the level of uncleared positions, better capturing the benefits of central clearing. The Final Report outlines ESMA’s proposals to maintain effective systemic risk coverage while minimising complexity and avoiding unnecessary compliance burdens for market participants.
ESMA emphasises several key obligations that firms must adhere to under the CFD product intervention framework. These include complying with retail leverage limits, providing margin closeout protection and negative balance protection, prohibiting monetary and non monetary incentives, ensuring the inclusion of prescribed risk warnings, and meeting all MiFID II product governance requirements. ESMA also reminds firms that they must conduct a thorough legal and regulatory assessment of any financial instruments they design or distribute, taking into account each product’s true economic substance and risk characteristics.
ESMA also informed that they have submitted the final draft RTS to the European Commission for endorsement. Once endorsed they will proceed to formal adoption.
4. ESMA Consultation on the Pot-Trade Risk Reduction Services under EMIR 3
In this consultation ESMA provided insight on posttrade risk reduction services (PTRRS) under EMIR 3. The consultation outlines proposed regulatory technical standards and guidelines governing how PTRRS, such as portfolio compression and other risk mitigation tools, should operate under a harmonised EU framework. These proposals aim to enhance transparency, strengthen risk management, support supervisory convergence and ensure the safe and efficient reduction of outstanding derivatives exposures.
ESMA’s consultation addresses several key areas, including the definition and scope of PTRRS, operational and organisational requirements for providers, risk management and governance arrangements, transparency and disclosure standards, and associated reporting and supervisory obligations. Market participants are encouraged to review the paper carefully and assess its operational, risk management and compliance implications. Feedback must be submitted to ESMA by 20 April 2026, with ESMA planning to publish a final report and submit the draft RTS for Commission endorsement in Q4 2026.
Concluding remarks
Overall, the various documents make clear ESMA’s intentions to keep firms closely aligned with evolving market practices across the EU’s derivatives landscape. Developments relating to CFDs, perpetual futures, revised clearing thresholds and post trade risk reduction services require firms to exercise heightened diligence and ensure full compliance with the strengthened regulatory standards. ESMA’s initiatives signal a continued push for proactive preparation, urging firms to update and reinforce their internal frameworks so they remain fully aligned with EMIR 3’s objectives. In doing so, ESMA aims to promote a more transparent and harmonised EU derivatives market going forward.