The European Securities and Markets Authority (ESMA) recently proposed changes to liquidation time horizons that central counterparties (CCPs) use for certain financial instruments under the European Market Infrastructures Regulation (EMIR).  Citing the possibility of regulatory arbitrage arising from differences with the U.S. CCP regime, ESMA seeks to shorten the liquidation period for non-OTC financial instruments.  This article discusses the legislative background and rationale for ESMA’s review and summarizes ESMA’s considerations, queries and proposals.  ESMA is seeking comments from CCPs, their clearing members and clients, including hedge funds.  For more on EMIR clearing obligations, see “E.U. Commission Publishes Regulations Setting Forth Clearing Obligations for Hedge Funds and Other Counterparties,” Hedge Fund Law Report, Vol. 8, No. 32 (Aug. 13, 2015); and “Comparing and Contrasting EMIR and Dodd-Frank OTC Derivatives Reforms and Their Impact on Hedge Fund Managers,” Hedge Fund Law Report, Vol. 6, No. 36 (Sep. 19, 2013).  For more on EMIR generally, see “EMIR Offers Three Models of Asset Segregation to Fund Managers That Trade OTC Derivatives,” Hedge Fund Law Report, Vol. 8, No. 15 (Apr. 16, 2015).