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Dealing on own account: Difference between revisions
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In any case this is all good stuff, if you can monitor, and keep a lid on, your commodity product exposure, or — if you are some kind of securitisation vehicle — you may wonder what “net outstanding notional” exposure means. 3(1) of the RTS addresses this. The punctuation in “commodity derivatives for cash settlement or emission allowances or derivatives thereof for cash settlement” leaves something to be desired — namely, some punctuation — but the only way we can read this is (i) cash-settled commodity derivatives; (ii) emission allowances; (iii) cash-settled emission allowance derivatives, which leaves out ''physically-settled'' commodity derivatives and emission allowance derivatives. | In any case this is all good stuff, if you can monitor, and keep a lid on, your commodity product exposure, or — if you are some kind of securitisation vehicle — you may wonder what “net outstanding notional” exposure means. 3(1) of the RTS addresses this. The punctuation in “commodity derivatives for cash settlement or emission allowances or derivatives thereof for cash settlement” leaves something to be desired — namely, some punctuation — but the only way we can read this is (i) cash-settled commodity derivatives; (ii) emission allowances; (iii) cash-settled emission allowance derivatives, which leaves out ''physically-settled'' commodity derivatives and emission allowance derivatives. | ||
This, we think, as something to do with MiFID’s fractalised coastline when it comes to commodities: Physical commodities are out of scope, “synthetic” commodities — ie commodity derivatives — are in — ''unless'' they are physically-settled commodity derivatives, which are out of scope | This, we think, as something to do with MiFID’s fractalised coastline when it comes to commodities: Physical commodities are out of scope, “synthetic” commodities — ie commodity derivatives — are in — ''unless'' they are physically-settled commodity derivatives, which are out of scope — ''unless'' they are traded on a regulated market in the EU (i.e., a trading venue), in which case they’re in scope again. This is the kind of flip-flopping, concatenated series of [[Double negative|multiple negatives]] that would get an [[Indemnifiable Tax - ISDA Provision|ISDA tax ninja excited]]. The odd one out are physical emissions allowances, which are sort of commodity-like — in that they’re inexorably tied to the commodities markets — but also [[financial instrument]]-like, in that they are abstract economic concepts represented and bounded by words, regulations, and legal title, and they can’t go off or be impounded in a warehouse in the Sudan, contaminated with sea-water or painted yellow and passed off as copper.<ref>https://www.mining.com/web/trader-buys-36m-of-copper-and-gets-painted-rocks-instead/</ref> | ||
In any case, we have a scenario where if you are trading on a regulated [[Venue|trading venue]], the ancillary business exemption is off the table, so it stands to reason that the only regulated activity you can conceivably be doing and still qualify is emissions trading, or transacting cash-settled OTC commodity (or, sigh, emission allowances) derivatives. | |||
{{sa}} | {{sa}} | ||
*[[Repackaging programme]] | *[[Repackaging programme]] | ||
{{ref}} | {{ref}} | ||