Commodity (MiFID definitions)

: Category: European Union Electricity Market Glossary; Published: 02 November 2014; Last Updated: 18 August 2020

'Commodity' within the MiFID framework means "any goods of a fungible nature that are capable of being delivered, including metals and their ores and alloys, agricultural products, and energy such as electricity" (Article 2(6) of the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive).

The above definition mirrors the earlier definition (applicable under MiFID I), which was included in Article 2(1) of the Regulation (EC) No 1287/2006 of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards record-keeping obligations for investment firms, transaction reporting, market transparency, admission of financial instruments to trading, and defined terms for the purposes of that Directive (OJ L 241, 2.9.2006, p.1)).

Some closer remarks on the nature of the commodities' definition under the MiFID II legal framework are made by the FCA in the Perimeter Guidance Manual, Chapter 13, Guidance on the scope of MiFID and CRD IV, p. 19).

The UK financial regulator observed in the said document:

"The fact that energy products, such as gas or electricity, may be "delivered" by way of a notification to an energy network (such as notifications under the Network Code or the Balancing and Settlement Code) does not prevent them being "capable of being delivered" for these purposes. If a good is freely replaceable by another of a similar nature or kind for the purposes of the relevant contract (or is normally regarded as such in the market), the two goods will be fungible in nature for these purposes. Gold bars are a classic example of fungible goods. In our view, the concept of commodity does not include services or other items that are not goods, such as currencies or rights in real estate, or that are entirely intangible (recital 26 of the MiFID Regulation)".

The MiFID II definition of "commodity" is also used by the Market Abuse Regulation (MAR) - cross-reference in Article 3(1)(14), and SFTR (Article 3(17)).

Commodities topology under the EMIR derivatives reporting framework

Under the secondary legislation governing the EMIR derivatives reporting framework, i.e.:

- Commission Delegated Regulation (EU) 2017/104 of 19 October 2016 amending Delegated Regulation (EU) No 148/2013 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to regulatory technical standards on the minimum details of the data to be reported to trade repositories, and

- Commission Implementing Regulation (EU) 2017/105 of 19 October 2016 amending Implementing Regulation (EU) No 1247/2012 laying down implementing technical standards with regard to the format and frequency of trade reports to trade repositories according to Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories;

the types of commodities underlying the contract (Fields 65 and 66 in the Table 2 (Common data)) are classified as follows:

AG = Agricultural

EN = Energy

 FR = Freights 

ME = Metals

IN = Index

 EV = Environmental
EX = Exotic 

OT = Other

Detailed formats of the particular commodity are specified for the purposes of Field 66 as follows:

Agricultural

GO = Grains oilseeds
DA = Dairy 

LI = Livestock