Recital 35

(35) Post-trade risk reduction services are an essential tool of risk management with respect to OTC derivatives. Post-trade risk reduction services rely on technical transactions that are pre-arranged, non-price-forming and market-risk neutral and that achieve a reduction in the risk in each of the portfolios. Portfolio compression services, which are currently exempt from the obligation to execute orders on terms most favourable to the client as laid down in Article 27 of Directive 2014/65/EU (‘best execution’) and transparency requirements, are a subset of post-trade risk reduction services. In light of their technical and non-price-forming nature, the transactions on OTC derivatives that are formed and established as a result of post-trade risk reduction services should not be subject to the derivative trading obligation. Taking into account the fact that providers of post-trade risk reduction services do not allow multiple third-party buying and selling trading interests in financial instruments to interact, they should not be considered to operate a multilateral system. They should similarly be exempt from requirements of pre- and post-trade transparency and of verifying best execution. The Commission should be empowered to specify, by means of delegated acts, what constitutes post-trade risk reduction services for the purposes of Regulation (EU) No 600/2014 and the particulars of the transactions to be recorded.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-13 · Text as adopted (Official Journal); later amendments are not incorporated in this text.