The authorisation under EMIR Regulation of Nasdaq OMX Clearing AB by the Finansinspektionen in Sweden as the first EU-based CCP on 18 March 2014 has limited impact on the European carbon market since the scope of the notification does not cover emission allowances.




In accordance with the procedure laid out under Article 5(1) of EMIR, ESMA was notified of this fact including the classes of OTC derivatives cleared by Nasdaq OMX Clearing AB - being intrest rates, debt instrument and equity.


When it comes to the clearing obligation, OTC derivatives regarding emission rights are tentatively classified by for EMIR purposes as a subtype "Emissions", type (or "Base product" as defined by ISDA) "Environmental" covered by asset class "Commodity derivatives".


Since commodity derivatives as a general asset class were not subject to the above authorisation, there is no at present the European CCP authorised under EMIR to clear emission allowances.


Another implication is that the legislative procedure to subject emission allowances to the clearing requirement has not started yet.


Besides, even if emission allowances were included in such authorisation for a CCP, it does not automatically mean immediate obligatiory clearing for all European carbon units on the OTC derivatives market.


The procedure requires ESMA to assess whether there are conditions for such mandatory clearing in respect to products notified by given CCP (and, if conditions are met, ESMA has up to six months from the time of the notification to draft the respective regulatory technical standards (RTS) consult and submit them for endorsement to the European Commission).


After the Commission's endorsement, the RTS are subject to a non-objection period by both the European Council and Parliament, after which the clearing obligation will be phased-in per type of counterparties.


The first procedure of this kind have started on 18 March 2014 with the authorisation of Nasdaq OMX Clearing AB as the first EU-based CCP, but for emission allowances.


The details on this issue can be viewed here and here.


For specific parameters of products covered by the Nasdaq OMX Clearing AB authoriation by the Sweden financial authority on 18 March 2014 see here.


Among effects of the above circumstances is that EMIR requirements for individual client segregation and portability (e.g. stipulated in Articles 38 and 39 of EMIR) came into force with respect to clearing members of Nasdaq OMX on 18 March 2014 (ESMA Q&As on EMIR (CCP Question 8(c)).