The European Parliament has voted in plenary session to adopt the so called “EMIR Refit” Regulation. The European Commission has proposed that
- small financial counterparties (SFCs) should not be subject to the current EMIR clearing obligation where they deal with OTC derivatives at a low volume which would not present a systemic risk to the financial system and where it is not economically viable to require central clearing;
- non-financial counterparties (NFCs) should be subject to the clearing obligation only when they exceed the clearing threshold;
- the financial counterparty should solely be responsible for reporting on contracts entered into with an NFC that is not subject to the clearing obligation;
- intra-group transactions should be exempt from the reporting obligation where at least one of the counterparties is an NFC;
- ESMA should develop and regularly update thresholds for financial counterparties and NFCs that take into account the systemic risk and interconnectedness of financial counterparties; and
- there should be a further extension to the exemption from central clearing for pension scheme arrangements, but that these entities should accelerate their work on finding a viable solution to enable them to participate.
The next state for the Regulation is a trilogue debate, expected in July.