ESMA have today published a new version of the Questions and Answers document on EMIR to be found here. There is one new answer which relates to the value that must be reported in the “clearing obligation” field. The field is becoming more topical with the imminent start of mandatory clearing for “Category 1” counterparties.
The question and answers (TR 42 on page 92) are in 3 parts:
a) Is this field in reference to the particular trade, or the asset class in general? A: If refers to the particular trade, i.e. this specific trade is subject to the clearing obligation. If it is between a pair of counterparties that are never subject to the obligation (e.g. if one counterparty is an NFC-), then it should be set to “N”. Otherwise it should only be set to “Y” is this trade is subject to the obligation.
b) How should contracts subject to mandatory clearing be marked during the front loading period? A: With a “Y”, even before mandatory clearing starts.
c) For how long may you report “X” (NA) is this field? A: Until the front loading obligation starts for category 1 counterparties for that class. Once the front loading obligation is in the field should be set to “Y”, if the obligation is in effect for that trade or “N” otherwise. For example category 2 counterparties should initially report “N” until their own front loading obligation commences.
For now, the majority of commodity and energy market participants are “NFC-” and will report “N”. However this may change with possible exemption loss under MiFID II, and failing that, if the hedge exemption is removed from threshold calculation.