Enhanced EMIR reporting scrutiny as from November 2015
- Category: EMIR
1 November 2015 marks the end of the period where trade repositories verified the completeness and accuracy of EMIR trade reports submitted by market participants using relatively less elaborate checks.
The first level validation, which is already in place since 1 December 2014, consisted in determining by trade repositories, which fields are mandatory in all circumstances and under what conditions fields can be left blank or include the Not Available (NA) value.
In turn, the second level validation, which will be mandatory as from the end of October 2015, will refer to the verification that the values reported in the fields comply in terms of content and format with the rules set out in the technical standards.
MiFID II ancillary activity exemption - competitive handicap?
- Category: MiFID
MiFID II ancillary activity exemption is sometimes perceived as a some sort of a safe harbour for commodity trading firms - for many not easy achievable, due to tight thresholds proposed in the draft level 2 legislation.
This harbour may, however, occur not so safe, and, equally, competitively disadvantageous.
EU energy and financial regulators in a dispute when energy contracts "must be physically settled"
- Category: MiFID
MiFID II interpretation undermines the EU Internal Electricity Market? The European energy regulators ACER and CEER unanimously argue this way and disagree with ESMA.
What sparked the fiercest discussion is whether the "REMIT carve-out" will be available to intermediaries without production, consumption or storage capabilities.
Hedging after 3 January 2017 - not for everybody
- Category: MiFID
Assume, the non-financial counterparty, in effect of, for example, modifications of the ancillary activity exemption, finds itself above the respective activity thresholds and, consequently, is driven under the financial regulation. Among MiFID II unexpected impacts is the fact, the legitimate hedging needs of the above entity may, potentially, by constrained by position limits. Why? Hedging exemption - in general foreseen when calculating the group's position limit - is not available to financial counterparties.
It appears, such conglomerate, currently being beyond financial regulation, will face the risk of its hedging transactions being cut by the position limit after 3 January 2017.
REMIT carve-out versus MiFID II position limits - something missing?
- Category: MiFID
The impact of MiFID II position limits on the commodity derivatives market remains uncertain. It is not only due to the ongoing process of establishing the regulatory technical standards, but equally depends on the market participants' behaviour in response to the MiFID II regulatory modifications.
Forwards in power or natural gas traded on an OTF that must be physically settled (so-called REMIT carve-out) - which are not covered by the MiFID II position limits' framework - may potentially represent the exemplary environment for testing the above hypothesis.
Does IOSCO intend to kill derivatives' OTC market?
- Category: EMIR
New rules on initial and variation margin prepared by financial regulators would pose a serious threat to derivatives' OTC market liquidity.