Template:Commodity regulation: Difference between revisions

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You must have a taste for multi-dimensional chess if you want to understand what is required in the world of [[commodities]], freight, weather derivatives and [[emission allowances]]. To wit:
You must have a taste for multi-dimensional chess if you want to understand what is required in the world of [[commodities]], freight, weather derivatives and [[emission allowances]]. To wit:
Section C of Annex I to [[MiFID]] includes the following emissions and commodity products as within the scope for [[Financial instrument|financial instruments]]:
{{quote|{{MIFID commodity financial instruments}} }}


===In scope===
===In scope===
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==={{strike|Out of...|''In''}} scope===
==={{strike|Out of...|''In''}} scope===
*[[Physically-settled]] [[commodity derivatives]] which would otherwise be out of scope, if not used “for commercial purposes” and having “the characteristics of [[derivative]] [[financial instruments]]” are ''in'' scope.
*'''[[Physically-settled]] [[commodity derivatives]]''' which (per below) would otherwise be out of scope, if not used “for commercial purposes” and having “the characteristics of [[derivative]] [[financial instruments]]” are ''in'' scope. That one had you going didn’t it!


===''Really'' out of scope===
===''Really'' out of scope===
*'''Actual [[commodities]]''', being consumable, perishable, paint ’em yellow ’n’ pass ’em off as copper, real-world things that people actually need to live, are ''out'' of scope.
*'''Actual [[commodities]]''', being consumable, perishable, paint ’em yellow ’n’ pass ’em off as copper, real-world things that people actually need to live, are ''out'' of scope.
*'''[[Physically-settled]] [[commodity derivatives]]''' are ''out'' of scope ... ''unless'' they are traded on an EU [[trading venue]], (i.e, [[OTC]] [[physically-settled]] [[commodity derivatives]]) in which case they are in scope ... unless they are “wholesale energy products traded on an OTF that must be physically settled” - which case they are ''out'' of scope.
*'''[[Physically-settled]] [[commodity derivatives]]''' (not falling into the no-man’s land bucket above) are ''out'' of scope ...
:... ''unless'' they are traded on an EU [[trading venue]], (i.e, [[OTC]] [[physically-settled]] [[commodity derivatives]]) in which case they are ''in'' scope ...
:: ... unless they are “wholesale energy products traded on an OTF that must be physically settled” which case they are ''out'' of scope again. I DON’T MAKE THE RULES FOLKS.

Latest revision as of 09:42, 3 July 2023

You must have a taste for multi-dimensional chess if you want to understand what is required in the world of commodities, freight, weather derivatives and emission allowances. To wit:

Section C of Annex I to MiFID includes the following emissions and commodity products as within the scope for financial instruments:

(4) options, futures, swaps, forwards and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash;

(5) options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;

(6) options, futures, swaps, forwards and any other derivative contracts relating to commodities that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled;

(7) options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 of this Section and not being for commercial purposes, which have the characteristics of other derivative financial instruments;


In scope

Out of... In scope

Really out of scope

  • Actual commodities, being consumable, perishable, paint ’em yellow ’n’ pass ’em off as copper, real-world things that people actually need to live, are out of scope.
  • Physically-settled commodity derivatives (not falling into the no-man’s land bucket above) are out of scope ...
... unless they are traded on an EU trading venue, (i.e, OTC physically-settled commodity derivatives) in which case they are in scope ...
... unless they are “wholesale energy products traded on an OTF that must be physically settled” — which case they are out of scope again. I DON’T MAKE THE RULES FOLKS.