By Carolyn H. Jackson and Neil Robson
On July 19, the UK Financial Conduct Authority (FCA) updated its webpage on the introduction of the commodity derivatives position limits and reporting regime under the revised Markets in Financial Instruments Directive (MiFID II).
The FCA explains that, under the MiFID II Directive, firms or individuals who trade in commodity derivatives on a professional basis may, under Article 2(1)(j) of MiFID II, be able to make use of an exemption from authorization (referred to as the “ancillary activity exemption”). This requires an assessment of their trading activities in accordance with the tests set out in the Commission Delegated Regulation, which establishes the regulatory technical standard (RTS) criteria for when an activity is considered to be ancillary to the main business (commonly referred to as “RTS 20”).
Firms or individuals who rely on this exemption are required to notify the FCA annually through the FCA’s online system, Connect. The notification form can be found on the Connect landing page. To help firms and individuals with their notifications, the FCA has published a notification guide on how to complete the exemption notification via Connect.
A notification lasts for 12 months from the date it is first made (or from January 3, 2018 for notifications made before that date). Notifications must be renewed before the end of each 12-month period using Connect.
The webpage is available here.