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ESMA corrects EU emissions trading value for MiFID 2 compliance


Corrected H2 2016 OTC estimate is Eur2.49 billion

Was swapped with "Other" category's Eur460 billion

Companies can use data to see if need MiFID 2 license

The estimated value of over-the-counter trade in EU emissions allowances and their derivatives was Eur2.49 billion in the second half of 2016, and not Eur460 billion as previously suggested, EU financial authority ESMA said Thursday.

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This impacts non-financial companies checking to see if they will have to comply with EU financial rules known as MiFID 2.

ESMA said the values for emissions and the "Other" commodity derivatives category were transposed in error in its June 30 estimates of EU commodity derivatives market sizes (see below for corrected figures).

Non-financial companies can use ESMA's data to calculate their share of individual EU commodity derivatives markets as part of checks to see if they must apply for a MiFID 2 license.

ESMA is not legally obliged to provide these estimates, and has said national competent authorities "may consider any alternative data which market participants provide."

EU energy traders' association EFET said Tuesday it appreciated ESMA's efforts to provide market size estimates, and that these were "broadly in line with preliminary industry estimates based on publicly available data."

"This means that firms which have based their internal assessments on these preliminary figures will now have more certainty when notifying their national competent authority" either of their need for a MiFID 2 license or their right to an exemption, EFET said.

Companies are exempt if their individual shares of estimated total EU commodity derivatives markets are below specific thresholds set by ESMA.

They are also exempt if their total speculative trading in commodity derivatives is less than 10% of their total trading, or if their estimated capital employed in trading EU commodity derivatives is less than 10% of their total capital employed across their business.

Most non-financial companies are likely to qualify for exemptions, according to industry observers.

Those that need licenses must get them by January 3, 2018, when MiFID 2 applies.

They will have to comply with more regulation, including higher capital requirements.

Table: Corrected estimated notional value of EU commodity derivatives markets 2016

--Siobhan Hall,
--Edited by Jeremy Lovell,


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