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CEBS received a call for advice from the Commission on prudential treatment of commodities business. It is part of the review of commodities business under the CRD that requires the Commission to consider the question of an appropriate prudential regime for firms carrying out business in relation to commodities derivatives and certain other derivatives contracts.
The main focus of the questionnaire is on the measurement and management of commodities business risk for internal purposes. Questions are also asked about industry's experience of the current regulatory framework and how a potential future regulatory regime would affect commodity firms and commodities business.
As a response to the call for advice CEBS will undertake a fundamental analysis of the prudential risks that arise from the conduct of commodities firms and commodities business. Thus the call for advice does not only cover business conducted by a commodity firm, but also by other financial institutions, e.g. a credit institution for which the commodity business represents only a part of its overall business.
In addition, the MiFID Directive includes a number of exemptions, for firms carrying out commodities business, from the rules in that Directive and, as a consequence, also from the application to those firms of the rules in the CRD. These exemptions are to be reviewed under MiFID and the issue of an appropriate prudential regime for such firms is also relevant to that work.
Deadline for responses is 20 October 2006.
Press release
Industry questionnaire
Call for advice