MEFRROC requirement
European Union Electricity Market Glossary

 


 

 

MEFRROC (meaningful economic and financial risk related to all the other components) requirement is involved with the definition of package transactions under the MiFID II Directive and aims at ensuring that only components that are economically and financially related can constitute a package order/transaction, and to avoid that components that are not economically or financially related in a meaningful manner are declared as a package order/transaction with the main objective of benefitting from the transparency regime for package orders/transactions.

 

 

Questions and Answers on MiFID II and MiFIR transparency topics, ESMA70-872942901-35

Non-equity transparency

 

Question 4a [Last update: 03/10/2017]

 

How is the requirement for a package order/transaction that ‘Each component of the transactions bears meaningful economic or financial risk related to all the other components’ to be interpreted?

 

Answer 4a

 

The requirement of meaningful economic and financial risk related to all the other components (mefrroc) aims at ensuring that only components that are economically and financially related can constitute a package order/transaction, and to avoid that components that are not economically or financially related in a meaningful manner are declared as a package order/transaction with the main objective of benefitting from the transparency regime for package orders/transactions.

 

ESMA expects trading venues and market participants trading packages to document how the meffroc requirement is met, either in the contract specifications for packages traded on trading venues or on a package-by-package basis in case of OTC-transactions.

 

ESMA expects trading venues and market participants trading packages to document how the MEFRROC requirement is met, either in the contract specifications for packages traded on trading venues or on a package-by-package basis in case of OTC-transactions.

 

The respective legal base is Article 1(1)(b)(ii) of the Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivative (for details see the definition for the package transaction under MiFID II).

 

 

 

 

 

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Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives, Article 1(1)(b)(ii)


Questions and Answers on MiFID II and MiFIR transparency topics, ESMA70-872942901-35, Non-equity transparency, Question 4a








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Last Updated on Thursday, 19 October 2017 19:53
 

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