FCA Policy Statement PS26/21 – Key Changes Effective 1 January 2027
The FCA has published Policy Statement PS26/21, introducing changes to the UK EMIR intragroup exemption regime. The changes aim to simplify the process for firms seeking exemptions from clearing and bilateral margin requirements for eligible intragroup transactions.
Under the previous framework, access to certain intragroup exemptions involving overseas group entities was dependent on regulatory equivalence decisions. The new regime removes this requirement and introduces a more streamlined notification-based process.
What are the key changes?
The main changes include:
- Permanent exemptions: Existing temporary intragroup exemptions, including those granted under the Temporary Intragroup Exemption Regime (TIGER), will become permanent, subject to the relevant conditions continuing to be met.
- Shorter notification period: For margin exemptions, the FCA notification period will be reduced from three months to 30 days. Firms may rely on the exemption after this period if the FCA has not raised an objection.
- Simplified notifications: The FCA will require less supporting documentation as part of the initial notification, although further information may be requested where necessary.
- UK intragroup transactions: Transactions between two UK counterparties will no longer require FCA notification. Firms will instead be responsible for assessing and ensuring that the exemption conditions are met.
- Broader eligibility: The new framework removes the distinction between financial and non-financial counterparties and allows eligible intragroup arrangements involving overseas entities to benefit from the exemptions without an equivalence decision.
What should firms do?
Firms should review their existing intragroup arrangements and exemptions to confirm that the relevant eligibility conditions continue to be satisfied.
They should also identify any additional intragroup transactions that may qualify under the revised framework, review their internal assessment and record-keeping processes, and prepare for the new FCA notification requirements where applicable.
The reforms introduced by PS26/21 specifically concern exemptions from the clearing obligation and bilateral margin requirements. They do not introduce changes to the UK EMIR transaction reporting requirements.
Consequently, firms should not interpret the availability of an intragroup clearing or margin exemption as an exemption from transaction reporting.
Intragroup derivative transactions may still be subject to UK EMIR reporting requirements, and counterparties should continue to ensure that their reporting arrangements appropriately capture and report these transactions in accordance with the applicable requirements.
Transition and implementation
The new regime will take effect on 1 January 2027. Existing exemptions, including TIGER exemptions, will continue without the need for firms to reapply, provided the applicable conditions remain satisfied. Firms planning to submit new exemption applications before 1 January 2027 should take account of the FCA’s transitional arrangements.
This article provides a high-level summary of FCA Policy Statement PS26/21 and is intended for general information purposes only. Firms should refer to the FCA publication and seek guidance from their Legal and Compliance teams when assessing the application of the exemptions to their arrangements.
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