European Market Infrastructure Regulation (EMIR) (2024)

Entering into derivative transactions identifies you as a 'counterparty'.

EMIR introduces two sets of counterparties:

1. Financial Counterparties (FC) include banks, investment managers, insurance companies or brokers.
2. Non-Financial Counterparties (NFC) include all entities that are not Financial Counterparties.

EMIR identifies two sub-categories of Non-Financial Counterparties (NFC).

All Non-Financial Counterparties must calculate their group's aggregate month-end average position in derivative contracts for the previous 12 months, excluding derivative trades executed for hedging purpose (the "position"). It is important to note that the first calculation must be conducted by 17 June 2019 for the period between 1 June 2018 and 31 May 2019 and must be conducted every 12 months thereafter.

Counterparties must compare their position to the EMIR clearing thresholds stated below to determine if they exceed them in any asset class:

1. Credit: EUR1 billion
2. Equity: EUR1 billion
3. Interest Rates: EUR3 billion
4. Foreign exchange: EUR3 billion
5. Commodities and others: EUR3 billion

When a Non-Financial Counterparty (NFC) determines that its position does not exceed any asset class clearing threshold it is classified as a 'Non-Financial Counterparty below the clearing thresholds' or 'NFC-'.

When a Non-Financial Counterparty (NFC) determines that its position exceeds an asset class clearing threshold or decides not to calculate its position, it is classified as a 'Non-Financial Counterparty above the clearing thresholds' or 'NFC+'.

EMIR identifies two sub-categories of Financial Counterparties (FC).

All Financial Counterparties must calculate their group's aggregate month-end average position in derivative contracts for the previous 12 months, including derivative trades executed for hedging purpose (the "position"). It is important to note that the first calculation must be conducted by 17 June 2019 for the period between 1 June 2018 and 31 May 2019 and must be conducted every 12 months thereafter.

Financial Counterparties must compare their position to the EMIR clearing thresholds stated below to determine if they exceed them in any asset class:

1. Credit: EUR1 billion
2. Equity: EUR1 billion
3. Interest Rates: EUR3 billion
4. Foreign exchange: EUR3 billion
5. Commodities and others: EUR3 billion

When a Financial Counterparty (FC) determines that its position does not exceed any of the clearing thresholds, it is classified as a 'Small Financial Counterparty' or 'FC-'.

When a Financial Counterparty (FC) determines that its position exceeds any of the clearing thresholds or decides not to calculate its position, it is classified as a large Financial Counterparty or "FC+".