Revocation of retained EU law Transitional amendments Amendments to the Markets in Financial Instruments Regulation (MiFIR) and the European Market Infrastructure Regulation (EMIR) 5. Aligning the Derivatives Trading Obligation with the EMIR Clearing Obligation
The Derivatives Trading Obligation (DTO) requires financial counterparties and some non-financial counterparties (counterparties being entities which take up opposite sides in a financial transaction) to trade certain classes of derivatives on UK authorised trading venues, or overseas trading venues that have been recognised as equivalent.
	The C learing O bligation (CO) requires certain OTC derivative contracts (as defined in the European Market Infrastructure Regulation (EMIR) ) to be cleared by an authorised central counterparty.
	The scope of the counterparties which are subject to the CO and DTO were intended to be aligned . I n 2019 EMIR was amended to alter the counterparties in scope of the CO, but the DTO was not updated to reflect that change. This has created unintentional misalignment which has led to uncertainty and complications for firms because the scope of counterparties subject to the DTO references the definition in EMIR. To mitigate this, the FCA has been using a transitional relief to address the issue.
	Th e Act formally realign s the counterparties (including financial, non-financial and analogous third country entities) in scope of the DTO with those in scope of the CO in EMIR.
	To ensure that misalignment is not an issue in the future, the scope of the DTO explicitly, and accurately, cross-references EMIR , so that a counterparty is within scope of the DTO if it is subject to CO (or , in the case of non-financial counterparties, if it is subject to the CO in respect of derivative contracts pertaining to the same asset classes).