On May 17, UK GVT issued commodity derivatives, emissions rules.
UK GVT Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023 (StIn 2023/548) on certain exemptions re. regulation of investment services for the purposes of Financial Services and Markets Act 2000.
Purpose
Amends Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
That order specifies activities, investments according to Financial Services and Markets Act 2000, Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (MiFI regulations), which transposed some EU law into UK law.
This instrument streamlines process for determining when a firm trading commodity derivatives or emission allowances needs to be authorized as an investment firm.
UK Treasury consulted on this as part of Wholesale Markets Review (see #110205).
UK FCA will introduce simpler, lower cost regime to assess when firm trading emission allowances/commodities as ancillary activity need not be authorized investment firm.
Currently, firms perform costly calculations to see if their trading activity is ancillary to main commercial business, and so if they are exempt from commodity position limits.
This instrument removes obligation for firms relying on ancillary activities exemption to notify FCA of their exemption annually; and removes article 72J of regulated activities order which enables firms to carry on their business without authorization if there is no data available to enable them to perform test establishing when an activity is ancillary.
It also removes references to EU CMSN delegated regulation 2017/592 (RTS 20).
That delegated regulations outlines regulatory technical standards for determining when a firm’s activity is considered to be ancillary to its main commercial business.
Effectiveness
This Order comes in force from Jan. 1, 2025.
Jun. 2024 Editorial Update
On Jun. 3, 2024, Reg-Track corrected effective date for this order to Jan. 1, 2025.
In May 2024, UK Treasury issued commodity derivatives order 2024, see #214038.
