Template:De minimis threshold capsule

There is some angst around weather (inadvertently or on purpose) end-users buying emissions allowances or in-scope commodity derivatives for their own purposes might be required to be authorised under MiFID 2 due to the revised definition of dealing on own account. After some scrambling around, ESMA derived a de minimis threshold test, meaning to keep those who weren’t executing customer orders and whose net exposure was under three billion annually, out of scope.

The definition of net exposure was perhaps too hastily drawn up, as it appears to reference only instruments that would be in scope for MiFID, and even then is a bit slapdash about it — commodities have a complicated relationship with MiFID, and it doesn’t make for casual cross reference — but logically it shouldn’t matter whether a contract is in or out of scope for MiFID, as long as it operates to reduce net exposure.