Revocation of retained EU law Transitional amendments Amendments to the Markets in Financial Instruments Regulation (MiFIR) and the European Market Infrastructure Regulation (EMIR) Fixed income and derivatives markets Alignment with the EMIR clearing obligation
EMIR imposes a number of requirements on counterparties to derivative contracts, central counterparties and trade repositories 19 . What EMIR seeks to tackle is essentially the risk that OTC derivatives (as defined in EMIR 20 ) pose to market stability and increased transparency in the OTC market. One of the key elements of EMIR, aimed at increasing the number of OTC derivatives that are cleared through CCPs 21 , is the Clearing Obligation (CO). The CO is set out at Article 4 EMIR. Like the DTO, the CO applies to (at least some) FCs, NFCs and analogous third-country entities. Where the CO applies, the entities in question must clear the trade through a CCP.
	The way in which MiFIR frames the scope of the DTO draws heavily on EMIR; indeed, the scope of the DTO and CO were originally aligned. In 2019, EMIR was amended by an EU Regulation commonly referred to as ‘EMIR Refit’. 22 The amendments to EMIR made by EMIR Refit include changes to the scope of the counterparties subject to the CO, namely, the introduction of an exemption from the CO for small FCs, and the modification of the mechanism for determining the obligations of NFCs that are subject to the CO because they exceed certain thresholds. EMIR Refit did not make corresponding changes to Article 28 MiFIR, and so the respective scopes of the CO and DTO stopped being aligned.
	The Act realigns the scopes of the CO and DTO by amending the DTO so that it only applies to relevant FCs and to relevant NFCs, being those FCs and NFCs that are subject to the CO.
	In the interest of the realignment between the CO and the DTO, the Act also amends EMIR to introduce an exemption to the CO mirroring the exemption to the DTO. The Act gives the Bank of England a rule-making power to determine which post-trade risk reduction services should benefit from the new exemption to the CO, which power will be analogous to the FCA’s power to determine the application of the exemption from the DTO; in exercising its respective power, each regulator will be required to consult with the other.