The Financial Services Authority has recently sent an e-mail to Chief Executives of specialist commodity firms asking them to confirm their categorization under the EU Markets in Financial Instruments Directive (MiFID) and the EU Capital Requirements Directive (CRD). The e-mail contains guidance to help commodity firms determine whether they are subject to MiFID and the CRD.

MiFID includes in its scope commodity derivatives and contains several exemptions relating to regulated activities undertaken in respect of such instruments. Commodity firms will first need to consider whether they fall within one or more of the MiFID exemptions. If they do not and are subject to MiFID, they will be subject to the requirements of the CRD. Commodity firms may be able to benefit from a transitional regime that exempts them from the CRD’s capital requirements, but not the CRD’s enhanced systems and controls requirements which are effective from November 1.

Firms have until October 12 to respond.