Following the introduction of the EMIR Refit, the European Securities and Markets Authority (ESMA) has published a final report recommending amendments to the trading obligation under MiFIR. ESMA itself cannot change legislation; it can only make recommendations to the EU Commission.
The EMIR Refit modified the scope of counterparties subject to the Clearing Obligation (CO), introducing an exemption for small financial counterparties and modified the way in which non-financial counterparties are defined. MiFIR has not accordingly been amended, which has led to a misalignment between the scope of counterparties subject to the CO under EMIR and the derivatives trading obligation (DTO) under MiFIR. Because of the close interconnections between those two obligations, EMIR Refit mandates ESMA to assess whether the DTO under MiFIR should be aligned with changes to the CO introduced by EMIR Refit, and to submit its findings in a report to the Commission which this final report now deals with.
ESMA recommendation to the European Commission (EC) is that counterparties subject to the clearing obligation and the derivatives trading obligation should be aligned.
On the basis of ESMA’s input, the EC’s report shall be submitted to the European Parliament and Council by December 18, 2020.