On 1 March 2023, HM Treasury published a draft statutory instrument: The Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances ) Order 2023.

The purpose of this instrument is to streamline the process for determining when a firm trading commodity derivatives or emission allowances needs to be authorised as an investment firm, which HM Treasury consulted on as part of the Wholesale Markets Review (WMR). The FCA will put in place a simpler and therefore lower cost regime for determining when a firm that trades commodities or emission allowances as an ancillary activity does not need to be authorised as an investment firm.

The instrument also removes references to Commission Delegated Regulation (EU) 2017/592 (RTS 20) which outlines the regulatory technical standards for determining when a firm’s activity is considered to be ancillary to its main commercial business.