It is now exactly two year since “the day of the MiFID” arrived on 3rd January 2018 and MiFID II started to apply (see here). MiFID II brought some significant changes to the financial sector in a wide variety of areas, whose impact has continued to be felt (see here, for example).

MiFID II also had an impact on the energy and commodities sector in several respects: Firstly, the removal of the original “commodities exemption” in MiFID I and its effective replacement with the “Ancillary Activity test” threatened to require many to obtain authorisation to be an Investment Firm. In the end, the change did not have as wide an impact as first thought, with few companies failing the test.

Secondly, the introduction of the position limits and position reporting regimes for commodity derivatives has led to some effort for those in the sector. The regime is now under review following a consultation (see here). A proposal in the consultation to remove the “REMIT carve out” that also came with MiFID II has already led to push back (see here).

Other rules relating to transparency and also algorithmic trading have also had an impact on the sector.

With different reviews now in motion, it will be interesting to see over the coming period whether the impact to the sector will increase with the arrival of updated legislation.