Industry Groups Propose £6B Commodity Derivatives Clearing Threshold Response to FCA
Summary
ISDA, CMCE, ETE, and FIA submitted a joint response to FCA's Quarterly Consultation CP26/8 proposing an increase to the commodity derivatives clearing threshold under UK EMIR. The industry groups support raising the threshold from €3 billion but advocate for €6 billion rather than the FCA's proposed €5 billion, citing changes in market structure, commodity prices, and volatility since the original threshold was set over a decade ago. The response notes this is a temporary measure pending a comprehensive Treasury review of Title II of UK EMIR.
What changed
Four major industry associations submitted a joint response to the FCA's consultation on UK EMIR commodity derivatives clearing thresholds. The groups support increasing the current €3 billion threshold but argue the FCA's proposed €5 billion level is insufficient, recommending €6 billion instead. The response highlights that market dynamics—including significantly higher commodity prices and increased volatility—have substantially eroded the real value of the current threshold since it was established over ten years ago. The industry argues the current level risks constraining UK commodity derivatives markets and harming UK competitiveness. The response characterizes the proposed increase as a temporary measure pending a comprehensive Treasury review of UK EMIR Title II.
For market participants engaged in commodity derivatives, this response signals continued advocacy for higher clearing thresholds that could reduce mandatory clearing obligations for some firms. Entities currently approaching or exceeding the €3 billion threshold should monitor both the FCA's response to this consultation and the broader UK EMIR Title II review, as comprehensive changes to threshold methodology may follow. Firms should also consider submitting their own responses if materially affected by clearing obligations.
What to do next
- Monitor FCA response to Consultation CP26/8 on commodity derivatives clearing threshold
- Review UK EMIR Title II Treasury review for implications on clearing obligations
- Assess impact of potential threshold increase on commodity derivatives clearing requirements
Archived snapshot
Apr 11, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
- Public Policy
- Europe
- ISDA, CMCE, ETE, FIA Respond to FCA on Commodity Derivatives Clearing Threshold
ISDA, CMCE, ETE, FIA Respond to FCA on Commodity Derivatives Clearing Threshold
On April 9, ISDA, the Commodity Markets Council Europe (CMCE), Energy Traders Europe (ETE) and FIA jointly responded to Chapter 7 of the UK Financial Conduct Authority’s (FCA) Quarterly Consultation CP26/8 on increasing the clearing threshold for commodity derivatives under the UK European Market Infrastructure Regulation (EMIR).
The response supports the FCA’s intention to increase the clearing threshold for commodity derivatives from its current level of €3 billion, but argues that the proposed level of €5 billion is not sufficient, and that the threshold should instead be increased to €6 billion. Changes to market structure and dynamics since this threshold was first set more than a decade ago, such as significantly increased commodity prices and market volatility, mean that the current threshold has shrunk considerably in real terms. A significant increase is necessary to avoid the threshold acting as a drag on UK commodity derivatives markets, and to enhance UK competitiveness.
The proposed increase is a temporary measure while the UK Treasury reviews Title II of UK EMIR, which is expected to include a comprehensive assessment of clearing thresholds and the methodology by which they are determined. It is essential that review continues to take account of the unique characteristics of commodity derivatives markets and does not result in a reduction below €6 billion.
Tags:
Commodity Derivative, Financial Conduct Authority (FCA), Regulation, UK
Documents (1)
Latest
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