On September 29, 2014, ESMA published a consultation on proposed guidelines on the application of the definition of FX and physically settled commodity forwards under the Market in Financial Instruments Directive (“MiFID I”). The lack of consistent interpretation and application of the definitions of these derivatives to date may have an impact on the application of EMIR. ESMA is considering publishing guidelines to provide clarity on the application of the definitions with the aim of harmonizing the approach across the EU. Under  MiFID II, which comes in effect on January 3, 2017, the European Commission is able to adopt secondary legislation which specifies the derivatives contracts that must be physically settled (as listed in Points (6) and (7) of Section C of Annex I to MiFID II). ESMA has been asked to provide technical advice to the European Commission to assist in the preparation of such legislation. The guidelines that ESMA is proposing to adopt are intended as an interim measure until such time as the Level 2 legislation is finalized and in effect across the EU.

ESMA’s consultation paper is available at: