EMIR Refit : ESMA statement on implementation timing issues


On 31 January 2019, the European Supervisory Authority (ESMA) published a public statement with regards to the issues around the clearing and trading obligations for small financial counterparties

Specifically, under regulation (EU) No 648/2012 (EMIR), the phase-in period of Category 3 counterparties shall reach its end on 21 June 2019, after which those counterparties will be subject to the clearing obligation for certain interest rate and credit derivatives. Category 3 counterparties are composed of Financial Counterparties (FCs) and Alternative Investment Funds (AIFs) that are Non-Financial Counterparties (NFCs) which have an aggregated month-end gross notional of Non-Centrally Cleared Derivatives above 8 billion euros.

Nevertheless, with the European Commission’s proposal to amend EMIR (EMIR Refit), Small Financial Counterparties (SFCs) may be exempted from the clearing obligation provided they remain below a newly defined clearing threshold. Taking into account that the political agreement for the EMIR Refit was only reached on 5 February 2019, SFCs are facing a timing gap as the deadline for Category 3 counterparties is expiring soon. Nonetheless, ESMA expects competent authorities not to prioritize their supervisory actions towards financial counterparties whose positions are expected to be below the clearing thresholds when EMIR Refit enters into force.

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