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MAR, Mifid, REMIT

FCA review of commodity trading markets

The UK’s FCA (Financial Conduct Authority) have recently concluded a review of the commodity markets, with a focus on controls to prevent market abuse. The report can be found here.

The report found quite a variance in the levels of governance, systems and culture across firms. While some firms were found to have good governance, a culture of abuse avoidance and well integrated risk management and abuse detection systems, ,others in the sector were found to be lacking. The issues are also highlighted in a report on the FT website which can be found here.

The general theme of the report would appear to indicate that the FCA feels that more supervision of the commodities market is required by financial regulators . This was also a theme of ESMA’s recent response to the EMIR review. The final Regulatory Technical Standards (RTS) of MiFID II, due in September, will give a better indication as to how much of the market will come under full scurrility on financial regulators, and be considered “financial counterparties”.

The report also comes out close of the first deadline for reporting under REMIT, where the data collected will be used to carry out surveillance of the gas and power markets. With the second deadline in April, and with MAR /MADII coming next year, we may see a focus on controls and surveillance taking hold in energy and commodities.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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