Are you a small financial counterparty?

The date for financial counterparties (FC) to conduct the ‘clearing obligation assessment’ is soon approaching. The clearing obligation assessment determines whether an FC is considered a Small FC (SFC) under EMIR Refit/UK EMIR Refit. This category of entity was introduced on 17 June 2019 when EMIR Refit came into force to reduce the clearing obligation for smaller financial firms.

What are the categories of FCs?

Categories of FCsWhat does it stand for?
FC+*FC subject to clearing obligation
SFCFC not subject to clearing obligation

*An FC+ is an FC conducting large volumes of derivative trading activity.

What’s the clearing threshold?

The threshold is different for each asset class as per the following the table:

Asset classesThresholds
Credit derivative contractsEUR 1 billion
Equity derivative contractsEUR 1 billion
Interest rate derivative contractsEUR 3 billion
Foreign exchange derivative contractsEUR 3 billion
Commodity derivative contracts and othersEUR 3 billion

When do you need to do the calculation?

The calculation is required every 12 months with the initial assessment date on 17 June 2019. Therefore, the next assessment date will be 17 June 2021.

Are you an SFC?

No.ScenariosWhat does it mean?
1The annual aggregate month-end position in one or more asset classes described above exceeds its respective clearing threshold.You are a FC+ for all OTC derivative contracts mentioned above.
2The annual aggregate month-end position in each asset class does not exceed the clearing threshold.You are an SFC.
2If you choose not to do the calculation.You are a FC+ for all OTC derivative contracts mentioned above.

How does this categorisation of FCs affect your EMIR reporting?

The assessment determines your requirement to clear all OTC derivative contracts pertaining to a class of OTC derivatives that has been declared subject to the clearing obligation. For further information, read Article 4(1)(a).

This consequently affects what you populate in the field Clearing Obligation when you do your daily EMIR reporting – Y, N, X.

If you become an FC+, what do you do?

  1. You are required to immediately notify the FCA (if you are a UK firm) or ESMA and the relevant competent authority (if you are an EU firm); and
  2. You will be subject to the clearing obligation from 4 months after that notification.

If you change from an FC+ to an SFC from, what do you do?

  1. You are required to notify the FCA (if you are a UK firm) or ESMA and the relevant competent authority (if you are an EU firm) that you are no longer required to clear.

How to notify FCA and ESMA?

For more information, please visit:

Or contact us if you would like to discuss the obligation clearing assessment.

Angela Yang

Angela works in our Sydney office. At TRAction, she provides regulatory support to our clients, monitors changes in the worldwide regulatory environment relating to trade and transaction reporting, assists with business development and client onboarding as well as development of PR and marketing strategies. Angela has several years of experience working in legal and compliance for financial services companies. She previously practiced in a leading boutique financial services law firm in Sydney as a solicitor with a focus on licensing, compliance, AML/CTF and M&A. Angela has a double degree in Actuarial Studies and Law from the Australian National University and is admitted as a solicitor in Australia.