On 29 May 2026, the Financial Conduct Authority (FCA) published Handbook Notice 141, confirming a significant recalibration of the clearing threshold for commodity derivatives under the UK European Market Infrastructure Regulation (UK EMIR). The threshold under UK EMIR has been raised from EUR 3 billion to EUR 6 billion – a doubling of the previous limit – with the change taking immediate effect from 29 May 2026.
Notably, the EUR 6 billion threshold exceeds the EUR 5 billion figure that the FCA had originally proposed in its March 2026 consultation paper (CP26/8). The decision to increase the originally proposed EUR 5 billion level was in response to feedback received to CP26/8.
Background and Rationale
Under UK EMIR, counterparties whose over-the-counter derivatives positions exceed prescribed clearing thresholds become subject to the clearing obligation and bilateral margin requirements. The commodity clearing threshold was originally set at EUR 3 billion in 2016.
The FCA’s decision to increase the threshold was motivated by two principal concerns. First, the sustained rise in commodity prices – with Brent crude oil, for example, up over 150% since 2016 – has meant that in real terms the threshold has effectively fallen substantially, reducing the volume of commodity derivatives that firms can transact before reaching the limit. Second, maintaining a threshold that has not kept pace with market developments risked placing UK counterparties at a competitive disadvantage compared to firms operating in other jurisdictions.
The FCA considers that the EUR 6 billion clearing threshold for commodity derivatives is proportionate and more accurately achieves the FCA’s original objective not to inappropriately apply margin requirements on firms which are unlikely to create material systemic risk.
Industry Engagement and Support
The FCA received two responses to CP26/8 (i.e., a joint response from multiple trade associations and another from an energy company). Both responses supported raising the threshold for commodity derivatives and strongly recommended that a level of at least EUR 6 billion was appropriate. Respondents also emphasised the importance of the increased threshold being implemented in advance of June, when most firms begin their next annual calculation period. The FCA’s final decision to adopt a EUR 6 billion threshold for commodity derivatives is therefore closely aligned with the position advocated by the CP26/8 responses.
A Transitional Measure Pending Broader Reform
The FCA has been clear that the increase in the clearing threshold for commodity derivatives should be viewed as a transitional measure as it continues to consider wider changes to the clearing regime as part of its review of Title II of UK EMIR. The continued FCA review may lead to the threshold for being amended again at a later stage.
In the interim, the EUR 6 billion threshold for commodity derivatives is designed to provide firms with an appropriate level in a market with higher commodity prices.
Practical Implications
Firms should review and update their UK EMIR policies, procedures and internal monitoring frameworks in light of the revised clearing threshold for commodity derivatives. Any status changes at the next calculation would require the relevant regulatory notifications and updates to derivatives counterparties.
Market participants should continue to monitor further developments regarding the clearing threshold for commodity derivatives closely and prepare for potential additional changes in due course.
Handbook Notice 141 is available here.
