ESMA issued an opinion on market size calculations for ancillary test under the second Markets in Financial Instruments Directive (MiFID II). The aim is to help market participants to assess whether their activities in commodity derivatives can be considered as ancillary to their main business.
The opinion details the exact methodology applied and the way market participants can use the data published by ESMA for their market share calculations. Under the revised MiFID II, market participants are required to measure their own activity against total market sizes in commodity derivatives. The market participants exceeding a certain market share are required to apply for authorization as an investment firm. National competent authorities and market participants find it challenging to determine the market size figures, as there is no centralized place recording on-venue and off-venue transactions for commodity derivatives and emission allowances and this data is not publicly available. Through this opinion, ESMA intends to help market participants in performing the ancillary activity test in MiFID II. ESMA believes that such guidance will contribute positively to the consistency of supervisory practices and will ensure consistent approaches throughout the EU.
Keywords: ESMA, Europe, MiFID II, Securities, Ancillary Test
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