Regulation (EU) 2019/834 amending EMIR (the Regulation on OTC derivative transactions, central counterparties (CCPs) and trade repositories (648/2012)) (the “EMIR Refit Regulation”) was published in the Official Journal of the EU (“OJ”) on 28 May 2019.

Update

The EMIR Refit Regulation will enter into force on 17 June 2019 (that is, twenty days after its publication in the OJ). The majority of provisions within the EMIR Refit Regulation will enter into force on that day.

Clearing

As set out in our recent Dillon Eustace briefing paper entitled “Council of EU adopts the EMIR Refit Regulation” here, a number of the key changes introduced by the EMIR Refit Regulation relate to the clearing obligations for counterparties. In our previous briefing paper we highlighted certain actions which financial counterparties (“FCs”) and non-financial counterparties (“NFCs”) need to take on the day the EMIR Refit Regulation enters into force.

Actions to be taken.

An FC or an NFC wishing to avail of the exemption from the mandatory clearing obligations under EMIR (as an SFC or as an NFC-, as applicable) must be in a position to perform the clearing threshold calculations on the day the EMIR Refit Regulation enters into force. The calculation must capture the average monthly derivatives activity in the last 12 months (i.e. ending on 31 May 2019) as further explained in our previous briefing article. The calculation should then be repeated annually. As a result, all such entities should be making the relevant preparations and calculations now so that they can make the results of the calculation known on 17 June 2019.

If the FC or NFC does not calculate its aggregate month-end average position for the previous 12 months, or if the result of that calculation exceeds any of the clearing thresholds, that FC or NFC is required to notify ESMA and the Central Bank on 17th June, 2019. It must prepare to commence clearing four months later (with an FC being required to clear all OTC derivatives subject to the EU mandatory clearing determination, whilst an NFC need only implement clearing for the particular asset class which exceeded the applicable EMIR clearing threshold.