EMIR - CONSOB AND ITS ACTIVITIES
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Regulation (EU) No. 648/2012 on OTC derivatives, central counterparties and trade repositories, adopted by the European Parliament and the Council of the European Union on 4 July 2012, has been in force since 16 August 2012 (EMIR Regulation). The EMIR Regulation identifies the following categories of entities:
- financial counterparties, whose taxonomy is set out in Article 2(8) of the Regulation;
- non-financial counterparties, defined as all undertakings established in the Union other than financial counterparties and central counterparties;
- qualifying non-financial counterparties, which fall within the broader category of non-financial counterparties but differ from them because the gross notional value of their portfolio of derivative contracts for which it cannot be objectively measured whether they reduce risks directly relating to their commercial activity or treasury financing activity exceeds certain thresholds, which differ by class of derivative contract.
The obligations arising from the EMIR Regulation apply depending on the category to which the entity belongs. In particular:
- financial counterparties are subject to:
- the clearing obligation, which consists of submitting for clearing by a central counterparty OTC derivative contracts belonging to a class of derivatives that has been declared subject to the obligation;
- the obligation to apply all risk-mitigation techniques provided for by the EMIR Regulation with regard to contracts not cleared by a central counterparty;
- non-financial counterparties are subject to:
- the obligation to verify that the value of the OTC derivatives portfolio does not exceed the clearing threshold;
- the obligation to apply certain risk-mitigation techniques with regard to contracts not cleared by a central counterparty;
- qualifying non-financial counterparties are subject to:
- the obligation to notify Consob and ESMA when the thresholds have been exceeded and when they have subsequently fallen back below those thresholds;
- the clearing obligation for contracts subject to the obligation and entered into after the thresholds have been exceeded;
- the obligation to apply all risk-mitigation techniques provided for by EMIR with regard to contracts not cleared by a central counterparty.
EMIR also introduces the obligation to report derivative contracts to a trade repository authorised or recognised by ESMA. This obligation applies to central counterparties and to entities belonging to each of the categories referred to above. Further information on the application of the EMIR Regulation and the forms for reporting the clearing threshold are available in the menu items on the right. Any questions may be sent to the following email address: post-trading@consob.it.
Emir Regulatory Fitness and Performance Program (Refit)
REPORTING FORMS RELATING TO THE CLEARING THRESHOLD AND FOR THE NOTIFICATION OF THE EXEMPTION FROM THE REPORTING OBLIGATION OF INTERCOMPANY DERIVATIVE CONTRACTS
CONSOB notification on intragroup exemption from the reporting obligation pursuant to Regulation EU n. 2012/648 (EMIR) art. 9.1, as amended by Regulation EU n. 2019/834 (REFIT)
Refit provides an exemption from the reporting obligation of intragroup derivatives contracts.
The exemption can be applied where at least one counterparty of the group is a Non Financial Counterparty (or would be qualified as a non financial counterparty if it were established in the Union) provided that:
1) both counterparties are included in the same consolidation on a full basis and both are subject to appropriate centralised risk evaluation, measurement and control procedures;
2) the parent undertaking is not a financial counterparty;
3) the counterparty has notified their competent authorities of their intention to apply the exemption;
4) the competent authority has express no denial – within three months from the notification – about the compliance with the condition referred to point 1) and 2).
CONSOB notification should be submitted through the following forms. Filling instructions are included in the forms.
CONSOB notification on clearing threshold pursuant to Regulation EU n. 2012/648 (EMIR) art. 4 (a) and art. 10, as amended by Regulation EU n. 2019/834
EMIR Refit provides for a new regime to determine when Financial counterparties (FC) and Non-Financial counterparties (NFC) are subject to the clearing obligation.
A Financial Counterparty (FC) that enters into position in OTC derivatives contracts may calculate their aggregate month-end average position every 12 months.
Where an FC does not calculate its position or where the aggregate result of the calculation, at group level, exceeds the clearing threshold for at least one asset class, the FC immediately notifies CONSOB and ESMA. From that point onward, the FC becomes subject to the clearing obligation for all the asset classes subject to the clearing obligation.
Non Financial Counterparty (NFC) that enters into position in OTC derivatives contracts may calculate its aggregate month-end average position every 12 months.
Where the aggregate result of the calculation, at group level, exceeds the clearing threshold for at least one asset class, the NFC immediately notifies CONSOB and ESMA. From that point onward, the NFC becomes subject to the clearing obligation for OTC derivative contracts that pertain to the asset classes in respect of with the result of the calculation exceeds the clearing threshold.
Where the NFC does not calculate its position NFC become subject to the clearing obligation for the OTC derivative contracts that pertain to any asset class.
This notification should be submitted using the clearing obligation notification form below.
The form also contains a section to notify that the Counterparty "no longer exceeds the clearing threshold".