MiFID II secondary legislation modifies the definition for "contracts having the characteristics of other derivative financial instruments and not being for commercial purposes". Physically settled OTC forwards are at stake.


In particular, clearing and margining are removed in the new Article 7 of the Commission Delegated Regulation (EU) of 25.4.2016 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.


See here for the outline of the new legal framework for "contracts having the characteristics of other financial instruments and being for the commercial purposes" distinguishing physically settled OTC forwards being financial instruments from products beyond the scope of financial sector legislation.