ESMA releases final guidelines clarifying the definition of commodity derivatives under MiFID I 

The European Securities and Markets Authority (ESMA) today published guidelines on the Markets in Financial Instruments Directive (MiFID) I. The purpose of these guidelines is to provide a common, uniform and consistent application of the definitions of commodity derivatives under C6 and C7 of Annex I of the current MiFID I, until MiFID II comes into force on 3 January 2017, when the European Commission issues its delegated acts in relation to these definitions.

ESMA has prepared these guidelines, because currently there is no single, commonly adopted definition of derivatives in the EU under MiFID I, particularly in the case of physically settled commodity forwards. The existing different national applications of the MiFID definitions are resulting in the inconsistent application of EMIR, which refers to the MiFID commodity derivatives definition. These guidelines therefore clarify the definitions by specifying, in particular, what is meant by “physically settled” and confirming that forwards traded on a regulated market or Multilateral Trading Facility (MTF) fall within the scope of MiFID I, Annex C6.

ESMA is mindful that under MiFID II the Commission is empowered to prepare delegated acts to further define C6 and C7 and ESMA presented its technical advice in this regard in December 2014. However, ESMA sees no inconsistencies between these guidelines and its advice to the Commission.

ESMA has decided not to translate these guidelines into other European languages due to the short duration of its application. These guidelines will apply from 7 August 2015 and will be superceded by the Commission’s delegated acts on MIFID II.

Source: ESMA

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