FIA, jointly with ISDA, has responded to the Financial Conduct Authority’s Consultation Paper 25/19 concerning changes to the ancillary activities exemption. The FCA aims to publish final rules later this year.
The ancillary activities exemption allows certain firms, such as utilities, to be exempt from the requirement to be authorised as an investment firm if trading commodity derivatives or emission allowances is ancillary to their commercial business.
The associations are supportive of replacing the market share test with an annual threshold test, but raise concerns about the suggested inclusion of trading venue activity. Doing so would add complexity, increase compliance costs, and reduce UK competitiveness relative to the EU and the US, where only non-venue derivatives are counted.
Read the response here.
