ESMA has written this letter to the DG FISMA of the European Commission, reiterating the changes that were recommended in the response to the EMIR review in August 2015. Some of the changes were acknowledged in the latest report issued by the Commission in November. The letter reiterates several parts of the proposed reform, including the desire to reform the Non Financial Counterparty (NFC) regime so that smaller NFCs have reduced requirements and larger ones have more requirements. This includes a potential change to the clearing threshold calculation methodology, possibly removing the hedge exemption but raising the threshold. If such a change went ahead, it would bring several energy and commodity traders into the NFC+ regime, introducing mandatory clearing, uncleared margin rules and more onerous reporting requirements. Some may also become Financial Counterparties due to the results of the Ancillary Activity test under MiFID II.
The changes also cover several other areas, including giving ESMA more authority, increasing sanctions and providing regulators more of a view into the contents of Trade Repositories. The letter also covers possible changes to the rules around Credit Rating Agencies.