It is clear now that according to the EU financial regulator opinion the first notification under Article 2(1)(j) of MiFID II must be made by January 3rd of 2018.


Given that the calculation period to be covered by this notification includes also the year 2017 it is quite astonishing.


The objective lack of credible market data necessary to be aggregated in the calculations for the purposes of the above notification also did not prevent the regulator from requiring of market participants to do the impossible.




On 31 May 2017 ESMA said:


"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 this exemption. The notification needs to have been made for a firm to be able to rely on it.

The first of such notifications must be made by January 3rd of 2018. For 2019 and subsequent years, the notification needs to be made by April 1st of each year. Any firm that has not applied for authorisation has to notify" (see Questions and Answers, on MiFID II and MiFIR commodity derivatives topics, 31 May 2017, ESMA70-872942901-28).



What to say more?


There is no problem with the subsequent notifications as regards the MiFID II ancillary activity exemption to be made by April 1st of each year, but the implementation of the new directive in the first year of its application is quite a scandal.


The three alternatives commodity derivatives face are:


1. to make the notification based on data which is not complete or entirely credible or

2. to immediately apply for a financial licence to be able to continue activity in 2018 (although it seems to be somewhat late for this) or

3. to exit the market.


All the above possibilities are a complete disappointment over the activity of the EU legislators and regulators.


If somebody counted on the national legislation introducing the extended deadline for the first notification, for example until the end of the first quarter of 2018, there may be a problem, then.


I'm afraid that the National Competent Authorities of the EU Member States may withdraw from their earlier, more relaxed, approach and referring to the ESMA's stance, present more stringent attitude with respect to the required notification deadline.













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