A new regulatory paradigm for EU commodity markets

From 3 January 2017, Europe's financial commodity markets will march to a different regulatory beat. The recast MiFID II (Markets in Financial Instruments Directive) and its sister regulation MiFIR (Markets in Financial Instruments Regulation) have, remarkably, been over five years in the making. But upon implementation, they are set to introduce sweeping changes to the structure and workings of EU financial commodity markets -- or rather, the entire European Economic Area (EEA), as the legislation has 'EEA relevance' -- impacting participants, trading venues, and regulators alike. Impending MiFID authorization and attendant capital requirements will surely influence, and in some case drive, affected firms' strategic business decisions. Other fundamental changes to market conventions are afoot, such as those brought about by the new MiFID transparency regime. Firms of every ilk will be affected and market structures could change. The final shape of these regulations and how the industry responds will define the commodity trading landscape in the EU for the next 5 to 10 years.