ESMA Calls for Clarifications on Derivatives Definition

In a letter addressed to the EU Commissioner for Internal Market and Services Michel Barnier, Steven Maijoor, ESMA chair, asks the EU Commission to clarify the definition of currency derivatives in relation to the frontier between spot and forward, their conclusion for commercial purposes, and the definition of commodity forwards that can be physically settled.

ESMA argues that the national transpositions of the Market in Financial Instruments Directive (MIFID) across EU member states resulted in an uneven definition of derivatives contracts "thus preventing the convergent application of EMIR."

The regulator asks the Commissioner to publish some clarifications under article 4(2) of Mifid through an implementing act, a European legal act that authorise the Commission to fill the gaps in a legislation when needed and to require uniform implementation in the Member States directly.