See here for an article on Splash 24/7 on Hanne Johansson of Nasdaq Global Commodities on the potential for MiFID II to drive freight trading out of the EU, possibly to places such as Singapore. Freight trading is particularly vulnerable to loss of exemptions under MiFID II, due to several factors.

Firstly, freight is considered in the “other” asset class when looking at the “Volume of Activity” test. It was mentioned in the MiFID II open hearing in February that freight trading occupies 57% of this “asset class”. It therefore does not require too much activity to breach the 0.5% threshold. Furthermore, freight trades are not treated as hedges themselves under the test, and since a trade can only count as a hedge if it is in the same “asset class”, the actual hedges also count towards the calculation. Therefore, unless there is a change in the final (and now delayed) Regulatory Technical Standards, many freight traders will lose their exemptions.

The article suggests that this will result in many moves to non EU destinations, especially for non EU trading. The article cites many reasons why this may happen. On the other hand though, it may well be the case that the regulations will eventually reach other jurisdictions, and this is mentioned as well.

It will be interesting to see what the final Regulatory Technical Standards eventually say, the impact they will have on the market, and also where the regulations head to next.