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European Commission provides answer on Ancillary Activity test

The European Commission DG FISMA has provided this written answer to ESMA on the outstanding question of whether the market size test portion of the Ancillary Activity test must be calculated on a group basis, following a request for an answer earlier this year (see here). The letter states that the  “test needs to be calculated by each person within a group that engages in either of the two relevant MiFID activities mentioned in Article 2(1 )(j). In consequence, the ancillary activities test must be calculated as many times as necessary for each separate person who trades in commodity derivatives within a group.“.

The test is defined by Regulatory Technical Standard 20, and must be used by those who wish to use the exemption from MiFID II as defined by Article 2(1)j, which primarily applies to those who trade energy and commodity derivatives. The test underwent several iterations over its life, with many  outstanding questions (see here). This letter aims to close off some of the outstanding issues.

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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