Readers know that mandatory clearing is being gradually phased in under EMIR for financial counterparties, and would apply to “Category 3 counterparties” (the smallest tier of financial counterparties, made up of alternative investment funds and other financial counterparties with gross notional outstandings below €8 billion) as from 21st June, and will remember that access to clearing for smaller derivatives users has been a concern (see also ISDA’s 2016 analysis and survey). ESMA reckoned in 2016 that Category 3 made up less than 5% of interest rate volume but about 93%-94% by number. Unlike the US, the EU has no exemption for Category 3, although the “EMIR Refit” will contain one, and it is making its way through the EU’s legislative process, and this aspect has been approved by the EP and the European Council. However, the EMIR Refit negotiations have not finished yet, and it may well not become applicable until after 21st June. And so, on Thursday ESMA issued another of its non-no action letters announcing that it expects competent authorities not to prioritise enforcement. ESMA has plenty of form here: it has done this regarding pension funds clearing under EMIR, the disclosure obligation in article 7 of the Securitisation Regulation and variation margin under EMIR. ESMA would like to have SEC-style power to do this properly but this is controversial because it gives ESMA discretionary power over institutions, over and above its role as a purely technical body.