ESMA sets out clearing thresholds under EMIR 3

ESMA has published its final report setting the clearing thresholds under the updated EMIR 3 framework, which is part of the broader DORA regulatory initiative. This establishes the quantitative levels at which non-financial counterparties become subject to mandatory central clearing obligations for their over-the-counter derivative contracts. The report provides the definitive values for these thresholds, which are a critical component of the new rules.

The change primarily affects non-financial counterparties that engage in derivative trading for hedging purposes, specifically those whose aggregate positions exceed the newly defined thresholds. Financial counterparties, including banks and investment firms, are also impacted as they must verify the status of their non-financial clients and ensure applicable clearing obligations are met.

Compliance teams at affected firms should immediately review the published threshold values against their firm's derivative trading activity to determine if they now fall under the clearing mandate. They must then prepare to implement the necessary operational and reporting changes, which include onboarding with a central counterparty and adhering to the related risk mitigation requirements. Firms should also update their client onboarding and monitoring procedures to reflect these new obligations.