MiFID II ancillary activity exemption - constant monitoring necessary
- Category: ROOT
So, MiFID II published in the EU Official Journal. Time for the preliminary verification of the modified scope for the ancillary activity (or "commodity derivatives trader") exemption - Article 2(1)(j).
Hedging activity under MiFID II
- Category: ROOT
Do hedging deserve any preferential treatment under MiFID II? Definitely!
What compensation for Long-Term Transmission Rights curtailments
- Category: ROOT
The European Energy Market Regulator (the Agency for the Cooperation of Energy Regulators - ACER) more and more decisively marks its presence and puts its weight on political and strategic choices for the uniform European Internal Electricity Market architecture.
Recently, ACER heavily engaged its authority in determinations regarding the element, which possibly plays the most vital part in the EU national electricity markets' integration, i.e. market design for Long Term Transmission Rights and, particularly, their potential value.
The true regulatory battle is clearly visible between ACER and European Transmission System Operators assotiated in ENTSO-E and it currently concentrates on the enigmatic - in the context of electricity market - term of "firmness".
The final arbiter in this discrepancy will be the European Commission, which will settle the ultimate shape of the European Forward Capacity Allocation Network Code (FCA Code).
ACER's Recommendation No 02/2014 of 22 May 2014, despite of ENTSO-E reservations supported by elaborate argumentation, decisively required of the future FCA Code to implement the rule that caps on the compensation to be paid to market participants for curtailing Long-Term Transmission Rights may be introduced only before the Long-Term Firmness Deadline.
ENTSO-E stance and propositions were quite opposite and consisted in the rule that for curtailments between the Long-Term Firmness Deadline and the Day-Ahead Firmness Deadline, compensation is capped at the total monthly congestion income.
The ACER's position in this legal dispute is more convincing to me. In the framework of ACER's conception the institution of Long-Term Firmness Deadline seems to be more coherent. Transmission System Operators' role can be easily adjusted to their new responsibilities through regulation, while adequate resources can be assigned by energy regulators in tariffs.
Finally, the electricity market mechanics will, in the ACER's vision for the Long-Term Firmness Deadline construction, far more transparent and logical.
Trading obligation for derivatives under MiFIR - clear follow-up to EMIR developments
- Category: MiFID
As appears from the latest ESMA recommendations, trading obligation for derivatives under MiFIR regulatory technical standards will be shaped to closely resemble EMIR clearing requirement.
Broadly, the same prerequisites, entities covered, cross-border rules - all this indicates both measures represent only subsequent stages of the same process, having at its end sistemically important OTC derivatives subjected to the rules of authorised trading venues and cleared.
Financial law academy - how to avoid circularity
- Category: MiFID
Clearing arrangements as an indicator of whether a contract qualifies as a financial instrument? Manifest error in assumptions...
The consequences of subjecting professional emissions trading on own account to MiFID II rules
- Category: Emissions trading
Clearing threshold calculation under EMIR - ESMA explains what conglomerates are made of
- Category: EMIR
It needs to be recalled that positions taken by third-country non-financial entities in the same group as the non-financial counterparty, which would be non-financial counterparties if they were in the EU, count for the calculation of the EMIR clearing threshold.
Global conglomerates, EU-based subsidiaries thereof are relatively small, may be particularly affected.
ESMA in its EMIR Q&As update of 21 May 2014 (ESMA/2014/550) has underlined in this context that the group to which the non-financial counterparty belongs, includes subsidiaries, sisters and parent companies of the non-financial counterparty wherever the ultimate parent company is established.
This clarification is rather obvious, however, its regulatory origin and rank removes any remaining ambiguities.
See more on the clearing threshold calculation under EMIR...
Clarification on the cumulative use of exemptions under MiFID II
- Category: MiFID
ESMA expressed the view that "the execution of orders in financial instruments between two non-financials directly and without any further intermediation by third parties as ancillary activity is not covered by the term 'dealing on own account when executing client orders' and would therefore not prevent the persons concerned from using the exemptions under paragraphs (d) and (j) of Article 2(1) MiFID II."
See more on MiFID II exemptions:
1. dealing on own account (Article 2(1)(d)),
2. ancillary activity (derivatives trader exemption - Article 2(1)(j)).
Electricity Balancing Network Code transitional arrangements - existing agreements affected
- Category: Network Codes
While negotiating any agreements with electricity transmission system operators it is necessary to take account of provisions of the draft ENTSO-E Network Code on Electricity Balancing.
It is only non-binding draft now - some may say. Never mind...
EMIR frontloading - serious regulatory risk
- Category: EMIR
Frontloading - the term involved with EMIR Regulation should seriously worry derivatives players these days.
Excess margin risk of the clearing client - individual account much better than omnibus
- Category: EMIR
The manner in which the excess margin is dealt with by the clearing broker depends on whether the clearing client has an omnibus or individual client account.
Firmness - financial hedge between bidding zones or capacity product
- Category: Network Codes
Who will pay for market spread?