On 7 February 2020, the European Securities and Markets Authority (ESMA) published a final report suggesting amendments to the trading obligation under the Markets in Financial Instruments Regulation (MiFIR) following the introduction of EMIR Refit.

The European Market Infrastructure Regulation (EMIR) has been amended by EMIR Refit. The changes introduced by EMIR Refit concern inter-alia 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.

EMIR Refit was not accompanied by direct amendments to MiFIR, which means that there is a misalignment between the scope of counterparties subject to the clearing obligation and the derivatives trading obligation. EMIR Refit requires the European 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 proposals made in the final report have been set out in a Consultation Paper published on 4 October 2019 (our blog is here), to which ESMA received 18 responses.

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. ESMA is submitting its contribution to the Commission’s report a few months in advance of the set deadline and trusts that the Commission will endeavour to swiftly deliver its report to the European Parliament and to the Council.