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 (Text with EEA relevance)

• CELEX: Delegated Regulation (EU) 2021/1833
• Articles: 10

Article 1 Asset classes eligible for the ancillary activity test

In order to be considered to be ancillary to the main business of the group, the activities of persons referred to in Article 2(1)(j), points (i) and (ii), of Directive 2014/65/EU shall relate to any of one or more of the following asset classes:

(a)

commodity derivatives which relate to a commodity or an underlying referred to in points (5), (6), (7) and (10) of Section C of Annex I to Directive 2014/65/EU;

(b)

emission allowances referred to in Annex I, Section C 11, to Directive 2014/65/EU or emission allowances derivatives referred to in Annex I, Section C 4 to Directive 2014/65/EU.

Article 2 Ancillary activity tests

1.   The activities of persons referred to in Article 1 shall be considered to be ancillary to the main business at group level where they comply with any of the following conditions:

(a)

the net outstanding notional exposure in commodity derivatives for cash settlement or emission allowances or derivatives thereof for cash settlement traded in the Union calculated in accordance with Article 3, excluding commodity derivatives or emission allowances or derivatives thereof traded on a trading venue, is below an annual threshold of EUR 3 billion (De-Minimis Threshold Test);

(b)

the size of those activities calculated in accordance with Article 4(1) accounts for 50 % or less of the total size of the other trading activities of the group calculated in accordance with Article 4(2);

(c)

the estimated capital employed for carrying out those activities calculated in accordance with Article 5, paragraphs 1 and 3, accounts for not more than 50 % of the capital employed at group level for carrying out the main business calculated in accordance with Article 5(4).

2.   A group is considered to comprise the parent undertaking and all its subsidiary undertakings. It includes entities located in the Union and in third countries regardless of whether the group is headquartered inside or outside the Union.

Article 3 De-Minimis Threshold Test

1.   The net outstanding notional exposure referred to in Article 2, paragraph 1, point (a), shall be calculated by averaging the aggregated month-end net outstanding notional values for the previous 12 months resulting from all contracts in commodity derivatives for cash settlement or emission allowances or derivatives thereof for cash settlement entered into in the Union by a person within a group.

The net outstanding notional values referred to in the first subparagraph shall be calculated on the basis of all contracts in commodity derivatives for cash settlement or emission allowances or derivatives thereof for cash settlement that are not traded on a trading venue to which any person located in the Union is a party during the relevant annual accounting period referred to in Article 6(2).

The contracts in commodity derivatives or emission allowances derivatives for cash settlement referred to in the first and second subparagraph shall include all derivative contracts relating to commodities or emission allowances which must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event.

2.   The aggregation referred to in the first paragraph shall not include positions from contracts resulting from transactions referred to in Article 2(4), fourth subparagraph, points (a), (b) and (c), of Directive 2014/65/EU or from contracts where the person within the group that is a party to any of them is authorised in accordance with Directive 2014/65/EU or Directive 2013/36/EU.

3.   The net outstanding notional values referred to in paragraph 1 shall be determined pursuant to the netting methodology of Article 5(2).

4.   The values resulting from the aggregation referred to in this Article shall be denominated in euro.

Article 4 Trading Test

1.   The size of the activities referred to in Article 2, paragraph 1, point (b), undertaken in the Union by a person within a group shall be calculated by aggregating the gross notional value of all contracts in commodity derivatives or emission allowances or derivatives thereof to which that person is a party.

The aggregation referred to in the first subparagraph shall not include contracts resulting from transactions referred to in Article 2(4), fourth subparagraph, points (a), (b) and (c), of Directive 2014/65/EU or contracts where the person within the group that is a party to any of them is authorised in accordance with Directive 2014/65/EU or Directive 2013/36/EU.

2.   The total size of the other trading activities of the group referred to in Article 2, paragraph 1, point (b), shall be calculated by aggregating the gross notional value of all contracts in commodity derivatives, emission allowances and derivatives thereof to which persons within that group are a party.

The aggregation referred to in the first subparagraph shall include contracts resulting from transactions referred to in Article 2(4), fourth subparagraph, points (a), (b) and (c), of Directive 2014/65/EU or contracts where the person within the group that is a party to any of them is authorised in accordance with Directive 2014/65/EU or Directive 2013/36/EU.

3.   The overall market trading activities referred to in paragraphs 1 and 2 shall be calculated by aggregating the gross notional value of all contracts that are not traded on a trading venue to which any person located in the Union is a party and of any other contracts that is traded on a trading venue located in the Union during the relevant annual accounting period referred to in Article 6(2).

4.   The aggregate values referred to in this Article shall be denominated in euro.

Article 5 Capital Employed Test

1.   The estimated capital employed for carrying out the activities referred to in Article 2, paragraph 1, point (c), shall be the sum of the following:

(a)

15 % of each net position, long or short, multiplied by the price for the commodity derivative, emission allowance or derivatives thereof;

(b)

3 % of the gross position, long plus short, multiplied by the price for the commodity derivative, emission allowance or derivatives thereof.

The positions referred to in the first subparagraph shall be calculated on the basis of all contracts that are not traded on a trading venue to which any person located in the Union is a party and of any other contracts that is traded on a trading venue located in the Union during the relevant annual accounting period referred to in Article 6(2).

2.   For the purposes of paragraph 1, first subparagraph, point (a), the net position in a commodity derivative, an emission allowance or a derivative thereof in the Union shall be determined by netting long and short positions:

(a)

in each type of commodity derivative contract with a particular commodity as underlying in order to calculate the net position per type of contract with that commodity as underlying;

(b)

in an emission allowance contract in order to calculate the net position in that emission allowances contract; or

(c)

in each type of emission allowance derivative contract in order to calculate the net position per type of emission allowance derivative contract.

For the purposes of paragraph 1, first subparagraph, point (a), net positions in different types of contracts with the same commodity as underlying or different types of derivative contracts with the same emission allowance as underlying can be netted against each other.

3.   For the purposes of paragraph 1, first subparagraph, point (b), the gross position in a commodity derivative, an emission allowance or a derivative contract thereof, shall be determined by computing the sum of the absolute values of the net positions per type of contract with a particular commodity as the underlying, per emission allowance contract or per type of contract with a particular emission allowance as the underlying.

For the purposes of paragraph 1, first subparagraph, point (b), net positions in different types of derivative contracts with the same commodity as underlying or different types of derivative contracts with the same emission allowance as underlying cannot be netted against each other.

The calculation of the estimated capital shall not include positions resulting from transactions referred to in Article 2(4), fourth subparagraph, points (a), (b) and (c), of Directive 2014/65/EU or contracts where the person within the group that is a party to any of them is authorised in accordance with Directive 2014/65/EU or Directive 2013/36/EU.

4.   The capital employed for carrying out the main business of a group shall be the sum of the total assets of the group minus its short-term debt as recorded in its consolidated financial statements of the group at the end of the relevant annual calculation period. For the purposes of this paragraph, short-term debt means debt with a maturity of less than 12 months.

5.   The values resulting from the calculations referred to in this Article shall be denominated in euro.

Article 6 Procedure for calculation

1.   The calculation of the De-Minimis Threshold Test referred to in Article 3 shall be determined by reference to three annual calculation periods that precede the date of calculation, where the simple average of the resulting annual values shall be compared with the threshold referred to in Article 2, paragraph 1, point (a). The calculation of the size of the trading activities and capital employed referred to in Articles 4 and 5 shall be based on a simple average of the daily trading activities or estimated capital allocated to such trading activities, during three annual calculation periods that precede the date of calculation. The calculations shall be carried out annually in the first quarter of the calendar year that follows an annual calculation period, where the simple average of the resulting annual values shall be compared with the respective thresholds referred to in Article 2, paragraph 1, points (b) and (c).

2.   For the purpose of paragraph 1, an annual calculation period means a period which starts on 1 January of a given year and ends on 31 December of that year.

3.   For the purpose of paragraph 1, the calculation of the size of trading activities or estimated capital allocated to trading activities taking place in 2022 shall take into account the three preceding annual calculation periods, starting on 1 January 2019, 1 January 2020 and 1 January 2021, and the calculation taking place in 2023 shall take into account the three preceding annual calculation periods, starting on 1 January 2020, 1 January 2021 and 1 January 2022.

4.   By derogation from paragraph 3, the reference period for the calculation of daily trading activities or estimated capital allocated to such trading activities shall comprise only the most recent annual calculation period where both the following conditions are met:

(a)

daily trading activities or estimated capital allocated to such trading activities declines by more than 10 %, when comparing the earliest of the three preceding annual calculation periods with the most recent annual calculation period; and

(b)

daily trading activities or estimated capital allocated to such trading activities in the most recent of the three annual calculation periods is lower than in the two preceding calculation periods.

Article 7 Transactions qualifying as reducing risks

1.   For the purposes of Article 2(4), fourth subparagraph, point (b), of Directive 2014/65/EU, a transaction in derivatives shall be considered objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity where one or more of the following criteria is met:

(a)

the transaction reduces the risks arising from the potential change in the value of assets, services, inputs, products, commodities or liabilities that the person or its group owns, produces, manufactures, processes, provides, purchases, merchandises, leases, sells, or incurs or reasonably anticipates owning, producing, manufacturing, processing, providing, purchasing, merchandising, leasing, selling or incurring in the normal course of its business;

(b)

the transaction covers the risks arising from the potential indirect impact on the value of assets, services, inputs, products, commodities or liabilities referred to in point (a), resulting from fluctuation of interest rates, inflation rates, foreign exchange rates or credit risk;

(c)

the transaction qualifies as a hedging contract pursuant to International Financial Reporting Standards adopted in accordance with Article 3 of Regulation (EC) No 1606/2002 of the European Parliament and Council  ( 8 ) .

2.   For the purposes of paragraph 1, a qualifying risk-reducing transaction taken on its own or in combination with other derivatives is one for which a non-financial entity

(a)

describes the following in its internal policies:

(i)

the types of commodity derivative, emission allowance or derivative thereof contracts included in the portfolios used to reduce risks directly relating to commercial activity or treasury financing activity and their eligibility criteria;

(ii)

the link between the portfolio and the risks that the portfolio is mitigating;

(iii)

the measures adopted to ensure that the transactions concerning those contracts serve no other purpose than covering risks directly related to the commercial activity or the treasury financing activity of the non-financial entity, and that any transaction serving a different purpose can be clearly identified;

(b)

is able to provide a sufficiently disaggregate view of the portfolios in terms of class of commodity derivative, emission allowance or derivative thereof, underlying commodity, time horizon and any other relevant factors.

Article 8 Repeal

Delegated Regulation (EU) 2017/592 is repealed.

References to Delegated Regulation (EU) 2017/592 shall be construed as references to this Regulation and shall be read in accordance with the correlation table in the Annex to this Regulation.

Article 9 Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union .

Schedules & Appendices

ANNEX Correlation table

ANNEX

Correlation table

This Regulation

Delegated Regulation (EU) 2017/592

Article 1

Article 2(1)

Article 2

Article 1

Article 3

Article 2(2), (3) and (4)

Article 3(3) and (4)

Article 4

Article 2(2), (3) and (4)

Article 3(1), point (a), Article 3(2), points (a) and (b), Article 3(3) and (4)

Article 5

Article 3(1), point (b), Article 3(5) to (10)

Article 6

Article 4

Article 7

Article 5

Article 8

—

Article 9

Article 6