On 27 March 2019, the European Securities and Markets Authority (ESMA) published an updated version of its Q&As on MiFID II and MiFIR commodity derivatives topics.
Importantly, the Q&A’s include one updated question on ancillary activity, regarding when a firm that wants to make use of the ancillary activity exemption needs to notify its competent authority. The updated ESMA response to this question reads:
Article 2(1)(j) of MiFID II exempts persons who deal in commodity derivatives on an ancillary basis under a number of conditions. One of these conditions is that they notify annually the relevant competent authority that they make use of this exemption. The notification needs to have been made for a firm to be able to rely on it.
Ancillary activity notifications need to be made annually by April 1st of the year for which the exemption applies. Any firm that has not applied for authorisation has to notify.
In addition, ESMA has inserted a new Q&A under the ancillary activity topic.
The question asks:
Is a third-country firm (or a third-country subsidiary of an EU firm) dealing on an EU trading venue in commodity derivatives or emission allowances or derivatives thereof in scope of the ancillary activity test as per RTS 20?
The response is:
No. A third-country firm (or a third-country subsidiary of an EU firm) dealing on an EU trading venue in commodity derivatives or emission allowances or derivatives thereof is not in scope of the ancillary activity test as per RTS 20. Consequently such third-country firm (or third-country subsidiary of an EU firm) does not have to notify any EU competent authority or ESMA that it makes use of the ancillary activity exemption.