On 19 January, FIA and ISDA jointly submitted a response to ESMA's discussion paper on the review of clearing thresholds under EMIR. The response highlights the following key issues:
- The absence of equivalence decisions under EMIR Article 2a has led to the imposition of additional burdens on EU firms that trade on non-EU exchanges, or which have non-EU affiliates who trade on non-EU exchanges. This is likely to result in negative impacts for EU clients as EU firms may seek to avoid dealing on non-EU exchanges and may face practical difficulties in providing risk management or investment solutions to their EU and non-EU clients. This could also result in a negative impact on the competitiveness of EU firms compared with their non-EU competitors.
- The approach to the calculation of the clearing threshold under EMIR (and in particular the inclusion of centrally cleared OTC derivatives as well as physically settled exchange-traded derivatives in the threshold calculation) results in more onerous outcomes for EU non-financial counterparties than under OTC derivatives regimes in other jurisdictions.
- The associations support the call by the European Federation of Energy Traders for a substantial increase in the EMIR clearing threshold for commodities to a level comparable with thresholds in non-EU jurisdictions.
- The associations would also welcome clarification on the treatment of emission allowances under EU financial services regulation, and in particular, confirmation that emission allowances are not commodities and that derivatives on emission allowances are not commodity derivatives for the purposes of EMIR or for any other purposes.
