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EMIR, Mifid

ESMA report – Coal and oil derivatives/C6

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.

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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