The European Securities and Markets Authority (ESMA) has published an official opinion on the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR), in response to comments from the European Commission. The Commission's letter requested amendments to the draft regulatory technical standard (RTS) 20, which provides criteria to establish when a non-financial firm’s commodity derivatives trading activity is considered to be ancillary to its main business.

The draft RTS 20 provides quantitative tests that measure the size of the speculative commodity trading activity of the non-financial company, compared to the market and the firm's total activities. The Commission asked ESMA to amend the business activity test and to introduce a capital-based test, where appropriate, for certain firms.

However, ESMA maintains that the business activity test is already in line with the objectives pursued by the exemption for ancillary activities contained in MiFID II. It also states that a capital based test has significant drawbacks, in that: “Firstly, whether a firm would meet, or not meet the test, could be very unstable over time. Secondly, given the differences in size and the wide variety of sectors and participants represented in commodity derivatives markets, introducing such a test is not likely to meet the principle of ensuring a level-playing-field for market participants.”

Negotiations and amendments to the RTSs for MiFID II and MiFIR are ongoing. In total there are 28 draft RTSs, submitted to the Commission by ESMA in September 2015. MiFID is due to come into effect in January 2018.