MFA and AIMA submitted a letter to the European Securities and Markets Authority (ESMA) in response to its “Discussion Paper on the Clearing Obligation under EMIR” (DP). In the letter, MFA and AIMA referenced those derivatives contracts that are already subject to mandatory clearing in the U.S., and expressed the belief that those contracts are most suited to being subject to the clearing obligation in the European Union. With respect to phase-in of the European Market Infrastructure Regulation (EMIR) clearing obligation, MFA and AIMA recommended that ESMA provide at least a three-month phase-in period for all market participants from the date that ESMA determines that a specific class of contracts is subject to the EMIR clearing obligation before requiring market participants to clear that class of contracts. MFA and AIMA also urged ESMA not to phase in the EMIR clearing obligation in a manner that requires clearing members to clear ahead of clients. Lastly, MFA and AIMA expressed significant concerns with the possible retroactive application of the clearing obligation (i.e., “frontloading”) because it would fundamentally change the pricing assumptions used in respect of bilateral transactions, and thus, we urged ESMA not to require frontloading.