After Spot FX, All FX Derivatives Are About to Get Exempted from MiFID Reporting
- The ESMA will have to wait until 2017 to get a universal definition about what constitutes an FX derivative. Even then there is no clarity about how will a consensus decision be reached, as UK opposition continues.
According to a report by the Financial Times, which cites sources familiar with the ongoing debate, European authorities are postponing standard reporting of all foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term derivatives until MiFID II is implemented in 2017.
The development is not the biggest surprise, as we have already seen a divergence of opinions between different countries on whether or not certain products have to be reported under MiFID.
As has been the case with spot FX, derivatives rules will be clarified within the framework of MiFID II, which is still more than 2 years away from being implemented.
According to the report, there will be no guidance as to what constitutes a foreign exchange derivative, after the UK vigorously criticized definitions on which European authorities were working.
Different national regulators (with the UK Financial Conduct Authority being at the forefront), have issued different definitions about derivatives, with the main issue being whether FX Forwards FX Forwards FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula Read this Term constituted such. Back in August, the European Commission clarified that spot FX was exempted from reporting under MiFID.
The decision was taken by the ESMA board of supervisors on September the 25th. While the European regulatory body is aiming to work on a universal definition for the second issue of MiFID, there is a clear uncertainty on how the parties will achieve a consensus. The likelihood of the UK bowing to EU pressure from its position on the definition of FX derivatives is very slim at best.
According to a report by the Financial Times, which cites sources familiar with the ongoing debate, European authorities are postponing standard reporting of all foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term derivatives until MiFID II is implemented in 2017.
The development is not the biggest surprise, as we have already seen a divergence of opinions between different countries on whether or not certain products have to be reported under MiFID.
As has been the case with spot FX, derivatives rules will be clarified within the framework of MiFID II, which is still more than 2 years away from being implemented.
According to the report, there will be no guidance as to what constitutes a foreign exchange derivative, after the UK vigorously criticized definitions on which European authorities were working.
Different national regulators (with the UK Financial Conduct Authority being at the forefront), have issued different definitions about derivatives, with the main issue being whether FX Forwards FX Forwards FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula Read this Term constituted such. Back in August, the European Commission clarified that spot FX was exempted from reporting under MiFID.
The decision was taken by the ESMA board of supervisors on September the 25th. While the European regulatory body is aiming to work on a universal definition for the second issue of MiFID, there is a clear uncertainty on how the parties will achieve a consensus. The likelihood of the UK bowing to EU pressure from its position on the definition of FX derivatives is very slim at best.