FIA, together with CMCE, Energy Traders Europe and ISDA, has responded in support of the Financial Conduct Authority’s proposal to increase the clearing threshold for commodity derivatives as an urgent, interim measure ahead of a broader UK EMIR review later this year.
Since the original calibration of the EMIR clearing threshold over a decade ago, structural shifts, including inflation, sustained increases in commodity prices and heightened market volatility, have significantly changed market dynamics.
The scope of commodity derivatives has also expanded, clearing for OTC and exchange-traded derivatives has become more widely available and commodity exchanges have emerged in overseas jurisdictions, including the People’s Republic of China. The expansion of global physical markets has added further complexity.
Despite these shifts, the clearing threshold framework has not been updated to reflect the new realities. Therefore, raising the clearing threshold is an important and urgent corrective measure.
The associations also recommend setting the threshold at no less than EUR 6 billion, rather than the proposed EUR 5 billion, while noting that further review will be needed to ensure the framework remains appropriately calibrated to support both financial stability and growth.
Read the response here.
