On 4 October 2019, the European Securities and Markets Authority (ESMA) launched a consultation on possible amendments to the trading obligation under MiFIR following the introduction of the EMIR Refit Regulation (EMIR Refit).
The changes introduced by EMIR Refit concern the scope of counterparties subject to the clearing obligation. EMIR Refit introduces an exemption from the clearing obligation for small financial counterparties and modifies the mechanism to determine the obligations of non-financial counterparties above the clearing threshold (NFC+).
EMIR Refit was not accompanied by direct amendments to MiFIR, which currently leads to a misalignment between the scope of counterparties subject to the clearing obligation and the derivatives trading obligation. However, EMIR Refit requires the European Commission (Commission) to prepare a report assessing “the necessity and appropriateness of aligning the trading obligation for derivatives under Regulation (EU) No 600/2014 with changes made under Regulation (EU) 2019/834 to the clearing obligation for derivatives, in particular to the scope of the entities that are subject to the clearing obligation.” The Commission’s report is to be submitted to the European Parliament and to the Council by 18 December 2020, on the basis of an ESMA report to be submitted to the Commission by 18 May 2020.
The ESMA consultation paper is seeking views on the necessity and appropriateness of aligning the derivatives trading obligation under MiFIR with changes made under EMIR Refit to the clearing obligation, in particular to the scope of the entities that are subject to the clearing obligation.
The deadline for comments on the consultation is 22 November 2019. ESMA intends to submit a final report to the Commission in early 2020. The Commission’s report will be submitted to the European Parliament and to the Council by 18 December 2020.