On 22 November 2021, the European Securities and Markets Authority (ESMA) issued a document on EMIR clearing thresholds.

EMIR Refit introduces a mandate for ESMA to periodically review the clearing thresholds and update them where necessary, in order to ensure that the thresholds remain appropriate (e.g., to take account of any material changes in financial markets). That periodic review should be accompanied by a report.

The document that ESMA has produced is both a report, presenting ESMA’s analysis of the current situation, and a discussion paper, in order to receive input from stakeholders on a range of topics relevant in the context of a review of the clearing thresholds.

In the document, ESMA presents an analysis of the population of counterparties and groups subject to the clearing obligation after the entry into force of the EMIR Refit. The

purpose of the document is two-fold; on the one hand, to map the population that is currently subject to mandatory clearing to ultimately assess if the clearing thresholds are fit for purpose after the changes introduced in EMIR. And on the other hand, to assess if a revision of these thresholds would be beneficial to better tackle the systemic risk linked to over-the-counter (OTC) derivative trading activity, while preserving the clearing obligation as one of the pillars for financial stability in OTC derivative markets.

The document also includes simulations intended to give an indication of how the population of counterparties subject to the clearing obligation could change if the current clearing thresholds were slightly modified, which allows to better understand the sensitivity of modifying the current thresholds slightly and to observe if such a change would affect the efficiency of the clearing regime.

The deadline for comments on the discussion paper is 19 January 2022.