faq

ESMA Updates MiFID II Transitional Transparency Calculations for Electricity Derivatives

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On January 22, the European Securities and Markets Authority (“ESMA“) published an updated version of its transitional transparency calculations (“TTC“) required under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (600/2014) (“MiFIR“).

The update relates to the TTC for commodity derivatives and affects only electricity derivatives.

Further information is contained in section E10 of ESMA’s frequently asked questions (“FAQ“) (ESMA50-164-677) on the TTC, which explains why the last TTC results for commodity derivatives, published on December 6, 2017, have been modified.

The transparency calculations can be found here and the FAQs, which were published on ESMA’s website, can be found here.

FinCEN Issues Customer Due Diligence Rule (CDD) FAQs

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On July 19, 2016, the Financial Crimes Enforcement Network (“FinCEN”) issued FAQs regarding the customer due diligence requirements (“CDD”) that it published on May 11, 2016, for certain financial institutions, including brokers, dealers, future commission merchants and introducing brokers in commodities.  The FAQs provide interpretive guidance with respect to these requirements, including, in particular, the new regulatory requirement to identify and verify the identity of the “beneficial owners” of virtually all legal entity customers, other than a sole proprietorship and an unincorporated association.  The CDD defines “beneficial owner” as:

  • “each individual, if any, who, directly or indirectly, owns 25% or more of the equity interests of a legal entity customer; and
  • a single individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager. . .
  • or any other individual who regularly performs similar functions.”

The FAQs states:  “In short, covered financial institutions are now required to obtain, verify, and record the identities of the beneficial owners of legal entity customers.”

CFTC DSIO Issues FAQ on CPO and CTA Compliance

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On August 14, the CFTC Division of Swap Dealer and Intermediary Oversight issued a set of responses to frequently asked questions regarding compliance obligations for commodity pool operators and commodity trading advisers.  The issues addressed include compliance dates, wholly owned subsidiaries, trading limits, and the process for transitioning from an exemption from registration to registering or claiming another exemption.  CFTC Release.  CFTC Proposed Rule.

SEC FAQ on Mid-Size Advisers

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On June 28, the Division of Investment Management of the SEC issued FAQs regarding advisers with assets under management between $25 million to $100 million (Mid-Size Advisers). The FAQs remove Minnesota from the list of states in which a Mid-Size Adviser would not be subject to examination by a state securities authority. Mid-Size Advisers located in New York and Wyoming will still be required to register with the SEC. For a discussion of Mid-Size Advisers, see “Final Rules Affecting Private Fund Advisers Adopted Under the Dodd-Frank Act“. SEC FAQ.