The energy and commodity trading sector have long awaited news on the next version of Regulatory Technical Standard 20 of MiFID II, which outlines how the “Ancillary Activity test” will work. It is necessary for commodity and energy traders to “pass” this test in order to maintain an exemption from MiFID II (so long as certain other criteria are also fulfilled).
There have been many versions and developments around RTS 20, starting in earnest at the end of 2014 when the original version was issued with a “market size” and “capital test”. This was followed by a very different version in September 2015 with higher thresholds for the market size test and a “main business test”.
Following a request by the European Commission to ESMA to re introduce a capital test in some form, ESMA issued a new version of the test, but without the new capital test. Instead an accompanying option document outlined possible ways in which such a test could be introduced but then asked the Commission to rework the RTS if they desired.
This article on the ICIS Regulation Portal gives news that the new version of the test is expected very soon. Market participants in the sector eagerly await the document, so that they may determine whether they will be expected to set up a “regulated entity” under MiFID II. The article also refers to ESMA’s table of technical standards (here) which has been updated.