First rules on EMIR mandatory clearing adopted

See here for a press release from the European Commission, announcing the adoption of the Delegated Regulation around the mandatory clearing of certain interest rate instruments under EMIR. The rules require affected parties to clear the covered instruments via CCPs according to a phased timetable, which starts after 6 months and completes after 3 years, in four groups.

The phasing starts with clearing members, whether Financial Counterparty (FC) or Non Financial Counterparty (NFC). The next two groups cover reaming FCs according to their level of activity and the fourth other NFCs. Generally “NFC-“s, i.e. below the clearing threshold set in EMIR, are not subject to mandatory clearing.

Many in the energy and commodities industries are “NFC-” and will therefore not be subject to mandatory clearing. However, a proportion will lose their exemptions under MiFID and therefore become FCs. This will bring mandatory clearing into scope for such parties. Those who are still exempt may never the less find that some liquidity will move to cleared, which will increase pressure to clear even when it is not mandatory.