This Regulation (EU) No 648/2012, effective from 4 July 2012, establishes a legal framework for over-the-counter (OTC) derivatives, central counterparties (CCPs), and trade repositories within the EU. Its primary aim is to enhance the transparency and stability of the financial system by imposing requirements for the clearing of OTC derivatives and reporting of transactions. It involves the establishment of European Supervisory Authorities (ESAs) and outlines roles for the European Central Bank (ECB) and national authorities in overseeing compliance and risk management, ensuring the financial integrity and operational efficiency of entities involved in derivative trading.

Importantly, the Regulation mandates that derivatives contracts which are standardised must be centrally cleared by approved CCPs and reported to trade repositories. It also sets forth guidelines for risk mitigation techniques for non-centrally cleared derivatives, aiming for uniform application across member states to maintain competitive equality and protect investors.