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ARTICLE · 04 AUGUST 2025

UK Ancillary Activities Exemption Proposals Published For Commodity Derivatives And Emission Allowances

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The Financial Conduct Authority (FCA) recently published a consultation (Consultation) setting out its proposed approach to revising the ancillary activities test (AAT)...

United KingdomFinance and Banking
Carolyn Jackson
Carolyn Jackson
Nathaniel Lalone
Nathaniel Lalone
Christopher Collins
Christopher Collins
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Ciara McBrien
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The Financial Conduct Authority (FCA) recently published a consultation (Consultation) setting out its proposed approach to revising the ancillary activities test (AAT), which forms part of the ancillary activities exemption (AAE) from investment firm authorisation under Markets in Financial Instruments Directive. Separately, HM Treasury (HMT) haspublished a near-final statutory instrument (SI) that will amend the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) and confer rule-making powers on the FCA in respect of the AAE.

Background

The AAE allows a firm to be exempt from authorisation as an investment firm when its trading in commodity derivatives, emission allowances or derivatives of emission allowances satisfies the requirements of the AAT and provided the firm does not execute client orders, use a high frequency algorithmic trading technique or act as a market maker. Non-financial firms (i.e., end-users) can use the AAE to

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