MiFID - Market in Financial Instruments Directive

The revision of the MiFID Directive will (next to purely financial instruments) also have an impact on the future regulation of agricultural derivative markets.

MiFID covers all financial instruments.

• Commodity futures (including Agricultural Commodity Futures even with physical     delivery possibility) are financial instruments and Commodity futures trading falls therefore under MiFID.
• OTCs (Over The Counter trades) covering volatility or price changes of an underlying futures market also fall under MiFID.

MiFID does not cover:
Cash trades and forward trades for physical goods (including basis contracts of physical goods related to futures, such as rapeseed basis MATIF) traded under standard commodity contracts (such as FOSFA, GAFTA, NOFOTA, GROFOR, etc.) do not fall under MiFID. Paper contracts, such as Fob Dutch Mill oil and Lower Rhine meal, would therefore also not fall under MiFID.

FEDIOL cooperates with other European associations and members of PFP to suggest that Regulators and Exchanges cooperate to increase trading transparency, to improve market oversight and public perception of the integrity of the exchange-trade as these are all essential elements of the well functioning and the viability of those markets.

We further suggest that the legislative focus in order to prevent unjustified speculative price movements should be on convergence between futures and cash markets rather than on position limits.