ESMA EMIR Q&A updated again in 2021

November 19, 2021

Today (19th of November) ESMA have updated their EMIR Q&A document.

This is their 5th and likely the last update this year.

See Control Now notes on other 2021 EMIR Q&A updates:


This time we can see updates on 2 questions:

OTC Q3: Calculation of the clearing threshold

Added new point: h)

When a financial counterparty calculates its positions for the purpose of the clearing threshold determination in accordance with Article 4a(3) of EMIR, should it include in the calculation the OTC derivative contracts that are objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity entered into by the non-financial counterparties that are part of the same group?

Answer provided by the European Commission in accordance with article 16b(5) of the ESMA Regulation*7:

Yes. Article 4a(3), unlike Article 10(3) EMIR, does not provide for a hedging exemption. The hedging exemption in Article 10(3) EMIR is meant to avoid impediments for non-financial counterparties to appropriately mitigate their commercial risks, but it is not meant to be applied when it comes to determining whether a financial counterparty should be subject to the obligation to clear centrally. Article 10(3) EMIR only refers to “non-financial counterparty or by other non-financial entities within the group to which the non-financial counterparty belongs,” and not to financial entities within that group. Non-financial counterparties belonging to a group are not affected by the way the financial counterparties belonging to the same group calculate the threshold.


OTC Q10: Hedging Definition

Added new point: d)

Can non-financial counterparties (NFCs) whose core activity is to buy, sell or own financial instruments, benefit from the hedging exemption when using OTC derivative contracts to hedge certain risks, for example risks arising from the potential indirect impact on the value of assets the NFC buys, sells or owns resulting from the fluctuations of interest rates, inflation rates, foreign exchange rates or credit risk?

Answer provided by the European Commission in accordance with article 16b(5) of the ESMA Regulation*8

Yes. The hedging exemption set out in Article 10(3) EMIR applies to all non-financial counterparties, irrespective of what their core activity is. The list of financial counterparties in Article 2(8) EMIR is a closed list. It does not allow for the treatment of non-financial counterparties as financial counterparties for certain EMIR provisions, such as Article 10(3). That provision itself does not distinguish which non-financial counterparty is allowed to use the hedging exemption depending on that counterparty’s specific activity.

Full text of most recent version of ESMA EMIR Q&A can be found here:

ESMA Q&A on EMIR Implementation



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