ESMA has just published a Final Report and draft Regulatory Technical Standards(RTS) around changes to the clearing threshold that must be calculated by entities under EMIR to determine whether they are over or under the thresholds. For the many Non Financial Counterparties (NFC) in the energy and commodities world, this will help them to determine whether they are “NFC-“, which removes many obligations under EMIR, including relating to clearing and margining. This follows a consultation last year (see here).
The final report and draft RTS:
- Keeps the threshold for commodities at 4bn EUR (it was suggested to be lowered).
- Changes the calculation for NFCs to an entity by entity calculation.
- Makes the calculation based on uncleared positions.
- Does not offer the desired hedging relief for Virtual Power Purchase Agreements (VPPAs).