In March 2022 we published a statement[1] which provided an update on the ‘market share test’ as set out under Article 2 of UK MiFID RTS 20 relating to the ancillary activities exemption from authorisation as a MiFID investment firm for firms trading commodity derivatives, emission allowances and emission allowance derivatives.
We said that firms do not need to perform the market share test as part of determining their eligibility to use the ancillary activities exemption for 2022-2023.
In Handbook Notice No 99[2], we also said that a firm could use figures relating to 2018, 2019 and 2020 as their numerator for the purposes of its remaining main business test calculations. We also said that firms could use corresponding figures relating to 2019, 2020 and 2021. For the avoidance of doubt, provided data from 2018-2020 were used, the data period was the same for both the numerator and denominator.
If it could meet the main business test, a firm could continue to rely on the ancillary exemption in 2022, provided it met the other conditions of the exemption as set out in PERG 13 Q44.
The Treasury has proposed a Statutory Instrument that will make changes to the ancillary activities test removing the current quantitative aspects of the test. These changes will not take effect until the end of this year.
Therefore, we will continue to apply the approach described in Handbook Notice No 99 enabling firms to continue using the ancillary activities exemption for the year ahead (2023-2024) where they were able to rely on the exemption for 2022-2023 based on trading relating to the last previous published information (2018 to 2020) and maintain the additional flexibility enabling firms alternatively to have regard to their daily trading activity of the previous 3 years (2020-2022) for the purposes of continuing to rely on the ancillary exemption.