|MiFID II own account exemption modified|
|Monday, 01 August 2016 05:00|
MiFID II has not entered into force yet, but already became substantially amended. What has changed? Key issue - exemptions.
The respective provision regards dealing on own account exemption expressed in Article 2(1)(d) of the MiFID II.
I don't think this modification will be of crucial importance for commodity or carbon dealers, since it does not generally apply to such products (for other detailed conditions for the use of the dealing on own account exemption (Article 2(1)(d) MiFID II) see here), but those interested in other asset classes should pay attention to.
Article 2(1)(d)(ii) of MiFID II, when enacted in 2014, prohibited persons from using this exemption if they were a member of or a participant in a regulated market or multilateral trading facility (MTF) or had a direct electronic access to a trading venue.
The provision was indifferent whether the transaction was for speculative or hedging purposes.
This has changed now. Article 1 of the Directive (EU) 2016/1034 of the European Parliament and of the Council of 23 June 2016 amending Directive 2014/65/EU on markets in financial instruments amended MiFID II by replacing Article 2(1), point (d)(ii) by the following:
'(ii) are members of or participants in a regulated market or an MTF, on the one hand, or have direct electronic access to a trading venue, on the other hand, except for non-financial entities who execute transactions on a trading venue which are objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of those non-financial entities or their groups'.
Hence, the legislative sense of this modification will be that hedging transactions concluded by members of or participants in a regulated market or an MTF, or persons having a direct electronic access to a trading venue will still qualify under MiFID II own account exemption, provided, obviously, other conditions are fulfilled.
Speculative transactions will be treated as before.
See in the box the exact wording of the respective amendment.