The European Securities and Markets Authority (ESMA) has updates Questions and Answers (Q&As) on the Markets in Financial Instruments Directive and Regulation (MiFID II/MiFIR) commodity derivatives topics.

The Q&As provide new answers on:

• By when does a firm that wants to make use of the ancillary activity exemption need to notify its competent authority?
  
  Article 2(1)(j) of MiFID II exempts persons who deal in commodity derivatives on an ancillary basis under a number of conditions. One of these conditions is that they notify annually the relevant competent authority that they make use of the exemption. The notification needs to have been made for a firm to be able to rely on it.Ancillary activity notifications need to be made annually by April 1st of the year for which the exemption applies. Any firm that has not applied for authorisation has to notify.

• Is a third-country firm (or a third country subsidiary of an EU firm) dealing on an EU trading venue in commodity derivatives or emission allowances or derivatives thereof in scope of the Ancillary Activity test as per Regulatory Technical Standards (RTS) 20?
  
  No. A third-country firm (or a third country subsidiary of an EU firm) dealing on an EU trading venue in commodity derivatives or emission allowances or derivatives thereof is not in scope of the ancillary activity test as per RTS 20. Consequently such third-country firm (or third-country subsidiary of an EU firm) does not have to notify any EU competent authority or ESMA that it makes use of the ancillary activity exemption.

Further information:
To read more, please follow this link:
https://www.esma.europa.eu/sites/default/files/library/esma70-872942901-36_qas_commodity_derivatives.pdf

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Please Note: This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.

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