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Another year of regulation is nearly over – with some new Q+As

ESMA yesterday issued a questions and answers document on MiFID data reporting, which can be found here. The requirements apply to investment firms, including those in energy and commodities who must set up such an entity as a result of the Ancillary Activity test, outlined in RTS 20. There is an emphasis in the document on the use of Legal Entity Identifiers (LEIs), which are also further emphasised in the upcoming changes to EMIR.

This announcement follows many others in the last few weeks, ending an interesting year of regulation of the energy and commodity trading sectors.

The focus of the first few months of the year was on REMIT reporting, especially “phase 2”, the reporting off venue contracts, executions, transportation and fundamental data. The initial go live on 7th April was preceded by many questions and answers documents, and these continue to be published. Reporting was completed on 6th July, the backloading deadline.

At around the same time, MAR, the Market Abuse Regulation, started to apply on 3rd July. As a financial regulation MAR further prohibits market manipulation and insider trading, applying to financial instruments and spot commodities, whereas REMIT applies to physical and financial gas and power. However MAR also contains “effective monitoring” requirements which apply to a wide group of market participants. As a result of these rules coming in, and also an increasing number of investigations, especially under REMIT, the sector has seen an increased interest in effective monitoring , from both a procedural and technical perspective. This theme gained further traction over the course of the year.

However the pieces of information primarily sought after over the course of the year, have been related to MiFID II. Those in energy and commodities have been very keen to find out the details contained in RTS 20 on the Ancillary Activity test, and RTS 21 on Position Limits.  On 1st December, the European Commission adopted these documents, which are now subject to “non objection” by the European Parliament and Council. Many questions remain on these documents, and it remains to be seen how many companies will be required to set up “regulated entities” as a result.

Over the last few years, the energy and commodity trading sectors have been increasingly subject to “big compliance”. The role of compliance in the business has increased in important, incrementally becoming more “bank like”. The focus on anti abuse measures has progressed this journey over the course of the year, with MiFID II also playing an increasing role. This busy year thus ends with a few more rules “under our belt” and with the sectors compliance efforts further along the line in the journey to maturity.

We would like to thank all readers for their participation in this blog this year, and wish all warmest seasonal greetings and a happy New Year!



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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