On 28 May 2019, the European Markets and Securities Authority (ESMA) updated its guidance on the calculation of the clearing thresholds for Non-Financial Counterparties (NFCs) in light of EMIR Refit publication.
The updated Q&A clarifies the notification procedure for NFCs as to whether or not they exceed or no longer exceed the clearing thresholds and reduces the reporting burden on NFCs.
Key messages are as follows:
On the date of entry into force of EMIR Refit (17 June 2019) NFCs will need to have calculated their aggregate month-end average position for the previous 12 months. NFCs exceeding the clearing thresholds or choosing not to calculate their positions on 17 June 2019 will need to notify ESMA as well as the relevant NCAs
If the results of the calculation do not change from one year to another NFCs do not need to notify ESMA and NCAs. However, should these results change, ESMA and relevant National Competent Authorities would need to be notified
For each Member State where groups have entities trading OTC derivatives a single notification should be submitted to the relevant NCA should the entities located in that state exceed, cease to exceed or choose not to calculate their positions
Following 17 June 2019, NFC+ entities in category 4 will only be subject to the clearing obligation for the asset classes of derivatives for which they exceed the threshold. Should an NFC+ in category 4 choose not to calculate its positions, it will continue to be subject to the clearing obligation in all asset classes
Pension Scheme Arrangements do not need to calculate their positions nor notify ESMA and the relevant NCAs as long as they benefit from a temporary exemption from the clearing obligation
This follows a previous update on EMIR Refit on March 1 which can be found here