Research European Commodity Market Regulations - Part 1 | Page 12

European Energy Market Regulations V3.1

The EMIR Threshold for Non-Financial Counterparties
Non-financial counterparties that are over the threshold must bear more onerous requirements than
those that are under, as summarized in this chart:
Requirement

NFC-

NFC+
All trades to be reported including
daily market to mark information
and collateral information

Trade Reporting

All trades to be reported

Clearing

OTC Clearing not mandatory

OTC Clearing Mandatory

Timely Trade Confirmations

Currently must confirm within T+7
going to down T+2 in August 2014

Currently must confirm within T+5
going to down T+1 in August 2014

Portfolio Reconciliation

Must reconcile either quarterly or
annually depending on size of
portfolio

Must reconcile daily, weekly or
quarterly depending on size of
portfolio

Portfolio Compression

Must compress trades for
portfolios with over 500 trades

Must compress trades for
portfolios with over 500 trades

Daily Mark to market

Not required

Must mark to market or model
daily.

The requirement to clear, when it comes into effect, could require a great deal of extra capital from
the market participants; therefore, many market participants consider it to be desirable to be under
the threshold.

Threshold calculation
Since 15th March 2013, it has been obligatory for NFCs to calculate their threshold values on a daily
basis using a 30-day average, and to report to the NCA if over.
In order to be considered to be over the threshold, a market participant needs to be over one of the
following:
•
•
•
•
•

Credit - €1bn
Equity - €1bn
Interest Rates - €3bn
FX - €3bn
Commodities - €3bn

The gross notional value of the balance of each number is taken. There \