Earlier this week, ESMA published this report, which was submitted to the European Commission a few weeks ago. It provides a recommendation as to whether to extend the exemption for “C6 energy derivatives” from 4 January 2021.

A “C6 energy derivative” in this context is a coal or oil derivative that must be physically settled and that is executed on an OTF. This is distinct from “Wholesale energy products” i.e. gas and power physical forwards, that must be physically settled, executed on an OTF.

MiFID II provides for an exemption for such transactions from several rules until 3 January 2021 from:

• Being included in the EMIR clearing threshold calculation for NFCs.
• The clearing obligation (for those under the obligation by being an NFC+ or an FC that was first authorised on 3 January 2018).

ESMA are recommending in their report that the exemption be extended.