Due to the absence of implementation of EMIR in the EEA agreement yet, there is for the time being uncertainty of whether EEA counterparties should be considered as third country counterparties or not. Due to that uncertainty the collateral requirements suggested in article 2 GEN and following could cause disproportionate costs for EEA NFC – who might not be able benefit from any exemption from the margining requirements (in particular VM), unlike the EU NFC- when in an identical situation. The only available alternative to EEA NFC- would be to trade with non EU counterparties and NFC- thus forfeiting their free choice of counterparties (and not being able to enjoy the free circulation of goods and services granted within the EU and EEA).
In our view it is erroneous to consider EEA countries to be equivalent to third countries, since EEA countries are obliged to implement all EU regulation, which is relevant for the internal European market.
In addition, EMIR and the draft technical standard correctly recognize that European NFC – companies do not pose systemic risk and therefore exempt them from the requirements under EMIR article 11 (15). There is therefore nothing to gain from making EEA NFC - , which are comparable to European NFC - , subject to the requirement for a short term period until EMIR is implemented in the EEA countries.
For more details and the specific impact on the Norwegian electricity sector companies kindly read the attachment.
To prevent the cost that would arise for EEA NFC – which are considered to be third country NFC- in the transition period towards full EMIR implementation in the EEA we suggest to amend Article 2 GEN 4 (b) as follows : (b) where they relate to transactions entered into with non-financial counterparties other than those referred to in Article 10 of Regulation (EU) No 648/2012, including for the avoidance of doubt those counterparties established with the EEA which would be NFC- if they were established in the EU, they may agree not to exchange initial and variation margin;”
We would also suggest the addition of appropriate clarifications on page 7 paragraph 3 of the "Counterparties’ risk management procedures required for compliance with Article 11(3) of Regulation (EU) No 648/2012" chapter of the consultation document which represents interpretation guidelines.
"The RTS impose an obligation on EU entities to collect margin in accordance with the prescribed procedures, regardless of whether they are facing EU or non-EU entities. EU entities would have to collect margin from all third-country entities with the exception of EEA entities below the threshold, unless explicitly exempted by the EMIR or under the EUR 8 billion threshold, even from those that would be classified as non-financial entities below the threshold if they were established in the EU or the EEA.""