Methodology is the key element. As well as the right source of data – the input. Both are decisive for the verification, whether the result finally achieved is a credible and a true one. This is the commonly known paradigm.


How to implement MiFID II at a commodity business level? This task must be accomplished before the MiFID II date of entry into force.


But what to start with? The may potentially be an entire spectrum of possible business models under MiFID II. Which one most appropriately suits you – the answer obviously hangs, in the first place, on the inner mechanics of your firm.


However, there would be a limited risk in the hypothesis, the firm needs to begin with the thorough categorisation of its trading models.


The potential, but obviously, not exhaustive, levels to carry out the said categorisation may be conceived as follows:


1. the respective products specification: power, gas, transportation contracts, coal, oil, etc.;


2. the purpose of the transactions at issue, among the most meaningful differentiations under MiFID II (and EMIR as well) will be the differentiation of hedging and speculative trades;


3. identification of trading places within the firm's scope of interest – including, for sure, their names, but, also, more interestingly for MiFID consequent analysis – their MiFID II status i.e. regulated market/ MTF, OTF, OTC, etc.;


4. the transaction's character: dealing on own account, execution of orders on behalf of clients, back-to-back trading, matched principal trading, etc.;


5. intragroup/non-intragroup,


6. type of the transaction's settlement (any advance payments, etc.);


7. the accounting issues – important, but not decisive for MiFID II classifications (hedging represents an example – classification of the particular trade as hedging under IFRS does not prejudge the same when it comes to EMIR clearing thresholds' calculations in the case of portfolio or macro hedging (MiFID II designation of hedging refers to EMIR).


Having accomplished this categorisation task only, legal implications on the ground of MiFID II may be construed, which of the existing business models in the company are eligible to be continued after the MiFID II entry into force, under what circumstances, and - in the subsequent steps – the recommendations for the corporate group's structure set.




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