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Application of the ancillary activity exemption according to the Article 2(1)(j) of MiFID II

The National Bank of Slovakia calls attention on change in apllication of the AA exemption for the year 2022 and subsequent years based on Article 2(1)(j) of the MiFID II Directive, since Directive (EU) 2021/338 of the European Parliament and of the Council of 16 February 2021 amends, inter alia, the Article 2(1)(j) and Article 2(4) of the MiFID II Directive.
These changes were transposed into the Securities Act (version valid from 1.3.2022 – here)
Those changes are without prejudice to the legal obligation for relevant market participants to recalculate annually whether they can apply the AA exemption.
On 9 December 2021, Commission Delegated Regulation (EU) 2021/1833 of 14 July 2021 supplementing Directive 2014/65/EU of the European Parliament and of the Council by specifying the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level (RTS 20), which also repeals and replaces Delegated Regulation (EU) 2017/592, entered into force.

Market participants dealing on their own account or providing investment services in commodity derivatives, emission allowances or derivatives thereof, in the Union represent an ancillary activity to their main business and intend to apply an exemption based on the Article 2(1)(i) or (ii) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFID II), which has been transposed into Paragraph 54(3)(g) of the Securities Act, i.e. persons dealing on own account, including market makers, in commodity derivatives or emission allowances or derivatives thereof, excluding persons who deal on own account when executing client orders; or providing investment services, other than dealing on own account, in commodity derivatives or emission allowances or derivatives thereof to the customers or suppliers of their main business; pursuant to Paragraph 5(1)(j) of the Securities Act provided that for each of those cases individually and on an aggregate basis, the activity is ancillary to their main business, when considered on a group basis, those persons are not part of a group the main business of which is the provision of investment services or acting as a market maker for commodity derivatives, those persons do not apply a high-frequency algorithmic trading technique, and those persons report upon request to the competent authority the basis on which they have assessed that their activity is ancillary to their main business is not the provision of investment services under this Act or banking services under a special law, they do not need authorisation under Paragraph 54(2) of the Securities Act.

Whether a trading activity in commodity derivatives and emission allowances is ancillary to the main activity of a market participant, calculation according to the following RTS should be used:

Commission Delegated Regulation (EU) 2021/1833 of 14 July 2021 supplementing Directive 2014/65/EU of the European Parliament and of the Council by specifying the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level (RTS 20).

We also recommend you to use ESMA’s website Questions & Answers, if necessary.