EMIR REFIT: ESMA issues statement on derivatives trading obligation
ESMA has issued a statement on the misalignment between the scope of counterparties subject to the clearing obligation (CO) under the European Market Infrastructure Regulation (EMIR) and those subject to the derivatives trading obligation (DTO) under MiFIR. Since the entry into force of the Regulation amending EMIR as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories (EMIR REFIT), some counterparties are exempted from the CO while still being subject to the DTO.
ESMA’s statement addresses the possible implementation challenges that this misalignment creates for counterparties exempted from the CO, and additionally clarifies the application date of the DTO for those counterparties impacted by the modified application date of the CO under EMIR REFIT.
ESMA’s statement addresses:
- clearing and trading obligations for small financial counterparties and non-financial counterparties; and
- the date of application of the TO for Category 3 financial counterparties subject to the CO.
ESMA expects competent authorities not to prioritise their supervisory actions in relation to the MiFIR DTO towards counterparties not subject to the EMIR CO. For Category 3 financial counterparties subject to the CO, the date of application of the DTO should be the same as the new date of application of the CO as amended by EMIR REFIT. This date of application should be four months following the notification from the financial counterparty to ESMA and the competent authority as required under EMIR REFIT, rather than 21 June 2019.