FCA Survey Reveals 10 Times Increase in Firms Affected by IM

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The FCA has made use of data reported to Trade Repositories and provided under EMIR to consider the clearing threshold and IM phase-in thresholds.  The data they've used wasn't available before EMIR during the drafting of the RTS, and can now be used to reflect on the calibration of the regulations and the intended outcomes. From their analysis of UK financial counterparties reveals:

  • 95% of all OTC market activity comes from a group of around 20 banks
  • Adopting a single clearing threshold of €8bn (rather than the €3bn for Rates or €1bn for Credit) would capture 99.3% of market activity by requiring 6.3% of firms clear their OTC products
  • The implementation of IM driven by the drop from a threshold of €750bn to €8bn in 2020 results in a sudden increase of around 10 times the number of firms in-scope, rather than a more gradual phase-in envisaged when EMIR was drafted

The full report is attached below, and originated from the FCA website here.