Is FX spot a MiFID product?
To the extent Spot FX is brought within scope of MiFID ‘financial instruments’ or brought within scope of all three market abuse offences on a standalone basis, the impact for market participants and regulators would be significant.
Are FX forwards reportable under MiFID II?
The EC has determined that FX Forward contracts remain outside the scope of MiFID II if they satisfy all of the following conditions: The purpose of the contract is to facilitate payment for identifiable goods, services or direct investment. The contract is not traded on a trading venue.
Is an FX spot a derivative?
Based on settlement mechanism, exchange rate identification process, trading time, order size, volume, trading costs, and swaps, it is clear that spot Forex trading is not a derivative. All other forms of currency trading such as futures, vanilla options, binary options, and CFDs can be categorized as derivatives.
Is FX spot a financial instrument?
spot market foreign exchange agreements are not considered to be financial instruments for the purposes of MiFID.” Importantly, this approach to FX spot has been generally accepted by global regulators.
Is spot Forex regulated?
Most FX trading – is in formal terms – outside of the FCA’s remit, although the FX spot markets are regulated in cases of manipulation of prices and benchmarks. “Market participants can reasonably expect the Code to be a key component of proper standards of market conduct,” Latter said.
Is FX spot in scope for MiFID II?
MiFID II now applies to “non-equity products” as well, such as cash and derivative products in fixed income, FX and commodities. FX Spot is not covered by the regulation, as it is not considered to be a financial instrument by ESMA, the European Union (EU) regulator.
What is a FX spot deal?
Foreign exchange spot deal refers to the trade where both parties transact at the spot exchange rate of the day on the foreign exchange market, and settle the foreign exchange on the second business day after the trading date (T +2).
How does spot FX work?
A spot FX contract stipulates that the delivery of the underlying currencies occur promptly (usually 2 days) following the settlement date. The main difference between the contracts is when the trading price is determined and when the physical exchange of the currency pair occurs.