The European Commission (EC) has launched the consultation on where the boundary lies between what is a foreign exchange (FX) financial instrument and a spot FX instrument in order to provide clarity on the definition of a “financial instrument” under of
the Markets in Financial Instruments Directive (MiFID). The consultation is narrow in scope but has far reaching implications as:
· if a contract is considered a financial instrument for the purposes of MiFID, activity in that instrument may give rise to authorisation and other obligations under MiFID; and
· the definition is used in other legislation (the European Markets Infrastructure Regulation (EMIR), the Capital Requirements Directive, the Central Securities Depositories Regulation, the Market Abuse Regulation and the Benchmarks proposals) so any obligations
under these, most immediately reporting under EMIR, will apply.
Feedback on 10 specific questions is required by 9 May 2014.