ESMA provides market size calculations for MiFID II ancillary test
The European Securities and Markets Authority (ESMA) has issued an opinion helping market participants to assess whether their activities in commodity derivatives can be considered as ancillary to their main business.
Under the revised Markets in Financial Instruments Directive (MiFID II) market participants are required to measure their own activity against total market sizes in commodity derivatives. Those market participants exceeding a certain market share are required to apply for an authorisation as an investment firm.
ESMA provides indication of market sizes
ESMA collected data for the calculation of the on-venue market size from the trading venues located in the Euopean Economic Aarea (EEA), which it provides for the total year of 2015 and for the second half of the year 2016. In addition, ESMA also looked at the size of the OTC market for the second half of 2016 based on data from trade repositories. The exact methodology applied and the way market participants can use the data published by ESMA for their market share calculations are described in detail in the opinion.
Due to the lack of publicly available data for commodity derivatives and emission allowances, ESMA’s intention behind this publication is to help market participants in performing the ancillary activity test in MiFID II.