The European Council has agreed to postpone the application of certain capital rules to the end of 2020 for “Commodity Dealers” as reported here. This represents the latest step in the process of extending the delay already in force until the end of 2017.
Commodity and energy traders will need to observe rules such as CRD IV and CRR if they lose their exemption to “full MiFID II” because of failure to pass the ancillary activity test, whose final version is awaited from ESMA. Although the resulting regulated entity is a financial counterparty, it has the status of “Commodity Dealer” in financial regulations, and will be able to claim the above relief.
While the resulting capital requirements may be substantial, this paper from PwC briefly examines how those who fall under the regime may reduce the burden through various strands of optimisation. It is likely that the rules themselves, as applied to Commodity Dealers, will also be tailored during the delay, before they hit market participants.