A consultation on MiFID ended last night, and commodity traders will be interested to see what, if any, changes might come out of the proposal technical standards.
Energy traders are worried the tests to gain an exemption from MiFID are too low as proposed (read more here). A representative from industry group EFET said almost no EU energy company could use the exemption, which could really impact the sector. EFET is working on its own impact analysis of the proposed exemptions on the energy industry, to prove its point.
But it was clear from a recent hearing Paris that regulators might not be too sympathetic.
From ESMA’s point of view, anything that is not a hedge should be considered speculative activity. Energy companies engaging in speculative activity should be regulated in the same way as investment and financial firms, the ESMA line goes. And that was the nature of the political agreement for MiFID II, staff from ESMA added.
It will be interesting to read EFET’s impact analysis. But for the energy industry an adjustment of the threshold tests to gain an exemption or a wider definition of hedging might be the best that can be hoped for. It seems increasingly likely many energy companies should be preparing to apply for a MiFID licence.