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EMIR

ESMA reiterates EMIR reform objectives

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.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on energy and commodity regulation. He has more than 20 years of experience in energy and commodity trading, credit, risk and financial technology. He has delivered a series of trading, credit and risk solutions to a wide variety of oil majors, power and gas companies and investment banks. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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