Firms subject to UK EMIR are required to notify the FCA of clearing thresholds for UK FCs and NFCs once the transition period ends on 31 December 2020.
The UK Financial Conduct Authority (FCA) announced earlier this week that, following the expiration of the Brexit transition period after 31 December 2020, all UK financial counterparties (FC) and UK non-financial counterparties (NFC) that either exceed the clearing thresholds or that have chosen not to perform the determination of their positions against the clearing thresholds must submit a fresh clearing threshold notification to the FCA under the UK onshored version of EMIR (UK EMIR).
This clearing threshold notification must be sent on or after 1 January 2021 (the date when UK EMIR starts to apply) but prior to 17 June 2021 (the anniversary of the application of EMIR Refit, which introduced the current clearing threshold notification process).
This fresh notification will be required even if the UK FC or NFC had already submitted a clearing threshold notification under EMIR.
By way of reminder, the calculation is of the aggregate group, month-end, average position of OTC derivatives in each asset class for the previous 12 months compared against the clearing thresholds (being EUR 1 billion for credit and equity, EUR 3 billion for interest, FX, commodities and others).
For firms that are already clearing, and that intend to continue clearing, in-scope products this will mean a further one-off notification to the FCA in the same way that those firms submitted what was supposed to be a one-off notification to the FCA and ESMA in June 2019.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
