Short overview of basic requirements in view of the urgent need to implement operational and risk-management procedural changes.





Regulatory Technical Standards prejudge that facilitating indirect clearing arrangements is not mandatory for clearing members – the contentious issue as yet.



Commodity firms strongly opposed that exceeding the clearing threshold for one class of OTC derivative should trigger application of the clearing obligation or of the risk mitigation techniques for all classes of OTC derivative contracts.



Status of the intra-group transactions under the EMIR legal framework should be considered with respect to clearing obligation and collateralisation requirement separately.



The determination of the circumstances in which OTC derivative contracts are ‘objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity’ represents the key EMIR qualification, since when the criteria are met, the OTC derivative contract is excluded from the computation of the clearing threshold.



Emission market participants should prepare for clearing with CCP OTC emissions trades under circumstances specified by EMIR. In order to comply with the clearing obligation, a counterparty must become a clearing member, a client or establish indirect clearing arrangements. Determination of the most beneficial option is made sometimes difficult by the fact that these notions and their implications are often confused. ESMA Consultation Paper has shed, however, some light on these issues.



When one of the clearing thresholds for an asset class is reached as determined in EMIR, the counterparty is considered as exceeding the clearing thresholds and therefore is subject to the relevant EMIR requirement for all classes of OTC derivative contracts and not only for those pertaining to the class of OTC derivatives where the clearing threshold is exceeded.

But how is the counterparty trading with the non-financial participant (NFC) going to be made aware that the NFC has or has not yet exceeded the clearing threshold?