Template:Commodity regulation: Difference between revisions
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*'''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]]''' (not falling into the no-man’s land bucket above) 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 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. I DON’T MAKE THE RULES FOLKS. | :: ... 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. | ||
Revision as of 15:09, 21 June 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:
In scope
- Actual emission allowances, resembling as they do abstract financial instruments — and actually listed as such in Section C of Annex III of MiFID 2 (see point 11! they just snuck in there!) are in scope.
- Emission allowances derivatives, whether physically- or cash-settled, are in scope.
- Cash-settled commodity derivatives — including ones where either party has an option to cash-settle — are in scope.
- Weather derivatives, freight, inflation and economic indicator derivatives that can be cash-settled (it would be kind of fun having physically-settled weather derivatives wouldn’t it) are in scope.
Out of... 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
- 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.