EU EMIR 3: The new clearing thresholds regime

On 25 February 2026, ESMA published its final report on the draft technical standards to further detail the new EU EMIR clearing thresholds regime.

Read on for a recap of the existing regime, a closer look at what is changing and when, and a discussion of potential implications for the buy-side.

The existing clearing thresholds regime

Annual calculation

• Broadly, every 12 months a financial counterparty (FC) or non-financial counterparty (NFC) taking positions in OTC derivative contracts (OTCDs) may calculate its aggregate month-end average position in OTCDs for the previous 12 months. See the ‘Key changes’ section below for further discussion on the meaning of OTCD for EMIR purposes.
• If it does not run the calculation (known as opting-up) or the results exceed any of the clearing thresholds, it will need to make a regulatory notification (to ESMA and the relevant national competent authority (NCA) / the Financial Conduct Authority (FCA)) and will become subject to the clearing obligation (FC+/NFC+) as described in more detail below.
• Currently, the clearing thresholds are as follows (all measured in gross notional value):

FCs (Article 4a EMIR)

• FCs must include all OTCDs entered into by that FC or other group entities, unless the provision permitting certain UCITS and AIFs to calculate at the level of the fund applies.
• When an FC becomes FC+, it will become subject to the clearing obligation for all OTCDs subject to the clearing obligation entered into or novated more than four months following the FC+ notification (irrespective of the asset class(es) the clearing threshold was exceeded).

NFCs (Article 10 EMIR)

• For NFCs, the calculation includes all OTCDs entered into by the NFC or by other non-financial entities within the group to which the NFC belongs, which are not objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of the NFC or of that group.
• When an NFC becomes NFC+, it will become subject to the clearing obligation for all OTCDs subject to the clearing obligation entered into or novated more than four months following the NFC+ notification – but only in those asset classes in respect of which the result of the calculation exceeds the clearing thresholds or, where the NFC has opted up.

Changes in status

• FC+ and NFC+ should also ensure any subsequent change of status is notified.

UK EMIR vs EU EMIR

• While the current clearing thresholds regime and calculations under EU EMIR and UK EMIR are not identical₁ , the frameworks are broadly aligned. This is about to change significantly, as we will discuss below.

_{1. Example areas of difference include the clearing threshold for commodities/other as shown in the chart above, and the impact of regulated/equivalent markets for the purposes of the OTCD definition under each regime.}

The new clearing thresholds regime under EU EMIR

Key changes

• EMIR 3 introduced amendments to the clearing thresholds regime for FCs and NFCs, but with deferred application until the related technical standards enter into force. With the publication of ESMA’s final report, it seems likely that this will occur during 2026 (see below for further discussion on timing).
• As we have seen, the existing regime draws a distinction between OTCD and non-OTCD (the latter not being included in the calculation). It is perhaps worth emphasising that even this existing distinction is nuanced. For EMIR purposes, OTCD means a derivative contract the execution of which does not take place on a regulated market or on an equivalent third-country market for the purposes of the relevant EMIR regime (and UK and EU EMIR are not identical). OTCD is therefore capable of including on-venue derivatives where execution takes place on a non-regulated/equivalent market.
• Under the new regime, and for EU EMIR only, a further distinction will be drawn between cleared and uncleared OTCD.
• For FCs, this will mean moving to a regime with two separate sets of clearing calculations and clearing thresholds – one relating to OTCD which are not cleared at an authorised or recognised CCP under EU EMIR (uncleared positions), and the other relating to all OTCD (aggregate positions).
• For NFCs, only the clearing calculation and clearing thresholds for uncleared positions (as defined above) will apply. The calculation for NFCs will also become an entity level calculation, irrespective of whether the NFC is part of a group including other NFCs. Under the new regime, NFCs will need to include all uncleared positions entered into by the NFC which are not objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of the NFC or of the group to which that NFC belongs.

Proposed clearing thresholds for aggregate positions

• ESMA’s final report proposes to introduce clearing thresholds for aggregate positions in relation to OTC credit derivatives and OTC interest rate derivatives, and to maintain the existing thresholds for those asset classes (all measured in gross notional value). ESMA has proposed not to introduce clearing thresholds for aggregate positions in the other asset classes.

Proposed clearing thresholds for uncleared positions

• ESMA’s final report proposes the below thresholds for uncleared positions (all measured in gross notional value). As noted above, uncleared positions refers to OTCD which are not cleared at an authorised or recognised CCP under EU EMIR.
• ESMA has decided not to introduce more granular thresholds for commodity derivatives, and not to introduce a sixth bucket for other derivatives. The fifth bucket, under the new regime, would be for commodity derivatives and emission allowances.

Potential for changes in status

• To set the new clearing thresholds, ESMA noted that it conducted a detailed data analysis using EMIR trade repository data and aimed for the recalibrated thresholds to capture a similar population of counterparties and notional as under the existing regime. However, it is not clear whether any potential impact on the hypothetical classification of counterparties not directly subject to EU EMIR, but trading with in-scope counterparties such as EU dealers, was considered in the analysis. It may be that the material reduction in the clearing threshold for uncleared positions for eg equity derivatives will bring a number of third country funds (eg Cayman hedge funds with non-EU AIFMs or UK UCITS) into the hypothetical FC+ category when facing EU dealers.
• Even to the extent that the overall population of counterparties and notional captured is similar, counterparties must not assume that this means their EU EMIR status will not change. This will need to be considered on an individual basis. In particular, we note that for the credit, equity and interest rates asset classes, the thresholds for uncleared derivatives are significantly lower than the current thresholds. While only uncleared positions will count towards the new uncleared positions thresholds, the potential impact will depend on a counterparty’s portfolio.

The hedging exemption for NFCs

• ESMA decided not to make any changes to the current criteria for establishing which OTC derivative contracts are "objectively measurable as reducing risks".
• While ESMA consulted on whether further guidance or clarification was needed—particularly in light of feedback requesting explicit recognition of structured hedging agreements such as virtual Power Purchase Agreements as hedging instruments—ESMA concluded that such changes would go beyond its mandate under the current EMIR framework. It noted that broadening the definition of hedging or commercial activity, or incorporating Q&A into Level 2 legislation, would require changes at Level 1 (primary legislation), not through regulatory technical standards. ESMA also confirmed that the new Level 1 text already allows the hedging exemption to be applied on a group-wide basis and does not require further clarification in this respect.

AAR implications

• The active account requirement (AAR) under EU EMIR has a double condition for applicability, which counterparties are required to assess on a continuous basis.
• First, the counterparty must be subject to the clearing obligation under EU EMIR. Changes in status from FC- to FC+ or NFC- to NFC+ (or vice versa) therefore impact the satisfaction of the first condition.
• Second, the counterparty must exceed the “clearing threshold” in any of the AAR categories of derivatives (interest rate derivatives denominated in euro or Polish zloty and short-term interest rate derivatives denominated in euro), individually or in aggregate. This is a group level calculation for counterparties that are part of groups subject to consolidated supervision in the EU (and no special provision is set out for funds, or for NFCs, unlike in relation to the clearing obligation).
• As discussed above, under the new clearing thresholds regime, FCs will be subject to two sets of clearing thresholds, one for aggregate positions and one for uncleared positions. For the interest rates asset class (which is the one relevant for the AAR), the proposed clearing threshold for aggregate positions is the same as the existing, EUR 3 billion. The proposed clearing threshold for uncleared positions is considerably lower, EUR 2.2 billion. NFCs, under the new regime, will only be subject to the set of clearing thresholds for uncleared positions.
• The EMIR Level 1 text, as amended by EMIR 3, does not explicitly say which of these new sets of clearing thresholds applies for the purposes of the second condition of the AAR for FCs and for NFCs.
• ESMA was asked to elaborate on the interplay between the new regime and the AAR in the feedback to its earlier consultation, and it seems a missed opportunity that the final report does not go into this in any detail.
• As far as we are aware, there has been no indication from ESMA that the new clearing thresholds regime is expected to significantly expand the scope of counterparties subject to the AAR, suggesting perhaps that the clearing threshold for aggregate positions will apply to maintain the status quo. However, in the absence of further clarification or guidance this remains uncertain, and we will be keeping a look out for this in the coming months as we approach the potential go-live of the new clearing thresholds regime.

Implementation timeline

The new EU EMIR clearing thresholds regime will apply once the amended technical standards (RTS) enter into force. It is not possible to predict this with certainty, but we expect it could be as soon as Summer 2026 or shortly thereafter. ESMA has indicated that counterparties should have the flexibility to recalculate at their usual time (noting this is an annual calculation where made), or earlier if desired, after the RTS enters into force.

Implications for the buy-side

• This new regime has the potential to materially impact fund/client categorisation under EU EMIR, including where it applies indirectly through trading with EU dealers.
• For managers that are directly in scope for EU EMIR, or manage funds that are, ESMA’s final report will be essential reading. But even where EU EMIR does not directly apply to a firm/fund, the new clearing threshold regime needs to be considered to the extent that the firm/fund’s counterparties are subject to EU EMIR (as they will need information on the firm/fund’s hypothetical EU EMIR classification).
• We would suggest familiarising yourself with the new clearing thresholds regime now, before it starts to apply (and assuming it is adopted in its present form by the European Commission).
• Updates will be needed to EU EMIR policies and procedures, and it would be sensible to plan ahead, particularly if there is a possibility of a status change under the new regime. This would require the usual regulatory notifications and updates to dealer counterparties (eg in EU EMIR static data and any EU EMIR classification representations / information). This will likely be another area of UK/EU EMIR divergence – and so separate procedures will likely be needed across the two regimes.
• Managers should note that funds/clients which are directly in scope for both UK EMIR and EU EMIR, or indirectly impacted as a result of trading with UK and EU dealers, will need to run multiple sets of calculations against the clearing thresholds. This could result in certain funds or clients being FC+ or NFC+ under one regime and FC- or NFC- under the other regime. There was some risk of this already given the different threshold in the commodities asset class and the different equivalence regime for third country venues (and therefore what constitutes an OTCD), but these latest changes would make this more likely. For FCs, this could mean that mandatory clearing applies under one regime and not the other, and for NFCs that they are upgraded virtually across the board to a status broadly akin to FC (including eg UMR and tighter reconciliation requirements), again only under one of the regimes. It must also be assumed that where both regimes apply (eg because one entity is UK and the other EU) that the stricter prevails as between the parties. There is again a complexity where a single entity is subject to both regimes, eg an EU AIF with a UK AIFM, where there is a different classification under the regimes for the same structure. It is not clear that this has been thought through in detail.
• Where a counterparty becomes subject to the clearing obligation, it may ultimately need to put the necessary clearing arrangements in place if this has not already been done.
• Asset managers will also want to think about their client questionnaires and obtaining new data from clients, whether in IMAs, rep letters or other onboarding forms. Updates to Markit entries for clients may follow.
• Any potential impact on AAR scoping under EU EMIR should also be considered, as discussed above.

If you would like to discuss the new clearing thresholds regime, please do not hesitate to contact us.