Latest Level 3 ESMA Q & As related to MiFID II/MiFIR

ESMA published and updated in the last couple of days additional Level 3 Q&A papers. Due to the specification and clarification purposes of the Level 3 papers, this should help you during the implementation phase and could clarify open questions. Please find the relevant January/February 2017 Q&As below. PwC provides you with this Newsletter an overview of the latest questions related to the following topics:

  1. Transparency:
    – Systematic internaliser regime
  2. Market Structure:
    – Direct Electronic Access (DEA) and algorithmic trading
    – Multilateral systems
  3. Data Reporting:
    – Date and time of the request of admission and admission
    – Instrument identification code and Underlying instrument code
    – Maturity Date
    – Classification of Financial Instruments (CFI) and Financial Instrument Short  Name (FISN)
    – Request for admission to trading by issuer
    – Base Point Spread of the index/benchmark of a floating rate bond

Read the whole article.

We are happy to discuss with you any thoughts and issues or are happy to review your solutions with regard to MiFID II and MiFIR. Please do not hesitate to contact us.

Günther Dobrauz
Partner
Leader Legal FS Regulatory &
Compliance Services
+41 58 792 14 97
guenther.dobrauz@ch.pwc.com

Michael Taschner
Senior Manager
PwC Legal FS Regulatory and
Compliance Services
+41 58 792 23 25
michael.taschner@ch.pwc.com

Latest Level 3 ESMA Q&As related to MiFID II/MiFIR

ESMA was very diligent in December and published an updated version of the Level 3 paper where Q&As are covered to several topics. Due to the specification and clarification purposes of the Level 3 paper, this should help you during the implementation phase and could clarify open questions. Please find the relevant December 2016 Q&As below.

PwC provides you with this Newsletter an overview of the latest questions related to the following topics:

  1. Investor Protection
  2. Commodity Derivatives
  3. Transparency
  4. Market Structure
  5. Data Reporting

Read more…

 

We are happy to discuss with you any thoughts and issues or are happy to review your solutions with regard to MiFID II and MiFIR.

Please do not hesitate to contact us.

Günther Dobrauz
Partner
Leader Legal FS Regulatory &
Compliance Services
+41 58 792 23 25
guenther.dobrauz@ch.pwc.com

Michael Taschner
Senior Manager
PwC Legal FS Regulatory and
Compliance Services
+41 58 792 23 25
michael.taschner@ch.pwc.com

Final standards of MiFID II exception for commodity traders

Does your firm trade in commodities derivatives? If so, the publication of the final standards regarding the exemption of ancillary activities and the position limits regime under MiFID II is of importance to you.

MiFID II/MiFIR will generally require that any company trading in commodities derivatives on its own account or on behalf of third parties will need a license as an investment firm as of 3 January 2018. This rule will also affect commodities trading firms domiciled in Switzerland to the extent that they trade in commodities derivatives listed on an exchange domiciled in the EU or conduct OTC trades with a counterparty domiciled in the EU.

There are, however, certain exemptions available to this general license requirement. The most prominent of these exemptions is the ancillary activity exemption. The final technical standards for the criteria to establish whether an activity is considered to be ancillary to the main business under MiFID II/MiFIR were published by the European Commission yesterday. Ancillary activity exemption is granted if the following three thresholds are not exceeded:

        • Overall market threshold: The group’s notional value in speculative positions in the asset classes metals, oil and oil products, coal, gas, power, agricultural products and other products, when compared to the overall market trading activity in each of these asset classes, does not exceed certain thresholds (4% for metals, 3% for oil and oil products, 10% for coal, 3% for gas, 6% for power, 4% for agricultural products, 15% for other products, and 20% for emission allowances).
        • Main business threshold: This test is now comprised of two subtests. The first is still the ratio between the company’s speculative and overall trading activity. A value below 10% means that the test has been passed, a value between 10% and 50% decreases the thresholds mentioned in the overall market threshold test by 50%, and a value above 50% decreases these thresholds by 80%.
        • New – capital employed test: the third test is passed when the estimated capital employed for carrying out the activities (15% of the net position in addition to 3% of the gross position, multiplied by the net price of the derivative) is not more than 10% of the capital employed (total assets of the company minus short-term debt) at company level for carrying out the main business activities.

The European Commission has also published the final technical standards on the position limits on the size of a net position which a person can hold in exchange-traded commodity derivatives and economically equivalent OTC contracts. In other words, there will be position limits for each commodity derivative in each commodity class.

What does this mean for firms trading in commodities derivatives?
If you have not done so already, we recommend starting your MiFID II/MiFIR project now. Compliance with MiFID II/MiFIR will result in (material) changes to your organisation. Synergies can be gained by combining the MiFID II/MiFIR project with projects related to other regulations that are already in force or will soon come into force (such as MAR, FMIA and EU benchmark regulations).

We have had the great fortune to assist many large and smaller commodities trading groups in becoming MiFID II/MiFIR compliant, and we would be delighted to share this wealth of experience with you.

For your free consultation, please contact:

Dr Günther Dobrauz MBA
Partner
guenther.dobrauz@ch.pwc.com
+41 79 894 58 73

Dr Martin Liebi LL.M.
Senior Manager
martin.liebi@ch.pwc.com
+41 76 341 65 43

Risk Mitigation Obligations

The material impact for Swiss domiciled entities (banks, insurance companies, fund management companies, commodities traders, pharmaceutical and/or industrial companies) of the ESMA Final Draft OTC Derivatives Risk MitigationTechnical Standards on the risk mitigation measures that have to be implemented under EMIR and the Swiss Financial Market Infrastructure Act (FinfraG/FMIA).

The European regulators (ESMA, EBA and EIOPA) have issued the final draft of regulatory standards on risk-mitigation techniques related to OTC derivatives trading. These provisions apply to most Swiss-domiciled entities trading in OTC derivatives with an EU-domiciled entity, and will (indirectly) also affect the implementation of the risk mitigation measures under FinfraG at Swiss-domiciled entities falling within the scope of application of FinfraG/FMIA. The new standards will enter into force in the next couple of months, although they must technically still be approved by the European Commission. This publication gives a short overview of the main areas addressed by the new provisions.

Please contact with any question about the publication Günther Dobrauz or your previous contact at PwC.

 

 

Geldwäschereiprävention: die neuen Pflichten für Händlerinnen und Händler

Ab 2016 werden die Geldwäschereisorgfaltspflichten auf Unternehmen und Berufe ausserhalb des Finanzbereichs ausgedehnt.

 

Die Gesetzesänderung mit Bezug zur Geldwäschereiprävention, welche in Januar 2016 in Kraft tritt, schreibt für die natürlichen und juristischen Personen, welche gewerblich mit Gütern handeln und dabei Bargeld ab einem Betrag von CHF 100’000 entgegennehmen, strengere Regeln vor. Diese Bargeldzahlungen unterliegen neu einer verschärften Abklärungspflicht, und die Händlerinnen und Händler,  z.B. Immobilien-, Kunst- oder Edelsteinhändler, müssen, in Bezug auf diese Zahlungen, Sorgfaltspflichten wie Finanzintermediäre einhalten, ohne dass sie selber über eine Bewilligung für die Tätigkeit als Finanzintermediär verfügen.

Erfahren Sie mehr in unserem Informationsblatt:

Geldwäschereiprävention: die neuen Pflichten für Händlerinnen und Händler

Unsere Experten – Ihr Kontakt:

Susanne Hofmann

PwC | Legal Compliance Leader Switzerland | Director
Birchstrasse 160 | Postfach | CH-8050 Zürich
Email: susanne.hofmann@ch.pwc.com

Michèle Hess

PwC | Assurance Director
Birchstrasse 160 | Postfach | CH-8050 Zürich
Email: michele.hess@ch.pwc.com