The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2025 amend the 2017 regulations, expanding the Financial Conduct Authority's (FCA) ability to request information and intervene in matters concerning commodity derivatives to encompass 'applicable OTC commodity derivatives'.
The amendments extend the FCA's powers to include options, futures, and contracts for difference relating to commodities traded on UK trading venues, but which are not classified as financial instruments.
These changes came into effect immediately after relevant paragraphs in Schedule 2 of the 2023 Financial Services and Markets Act were enacted, applying to England, Wales, Scotland, and Northern Ireland.
Arguments For
Enhanced Regulatory Oversight: The amendments provide the Financial Conduct Authority (FCA) with broader powers to gather information and intervene in relation to commodity derivatives, improving oversight of the market and mitigating potential risks.
Increased Market Transparency and Stability: By expanding the scope of information requests, the regulations aim to increase transparency within the commodity derivatives market, leading to greater stability and reduced potential for manipulation or illicit activity.
Alignment with the Financial Services and Markets Act 2023: The regulations implement provisions of the Financial Services and Markets Act 2023, ensuring consistency and coherence within the UK's financial regulatory framework.
Protection of Investors and Market Integrity: The enhanced regulatory oversight supports the protection of investors from potential harm caused by the misuse of financial instruments, contributing to the integrity of the UK's financial markets.
Arguments Against
Increased Compliance Burden: The expanded scope of the regulations may increase compliance costs for market participants, particularly smaller firms, necessitating additional resources for data collection and reporting.
Potential for Overreach: Broadening the FCA's powers could potentially lead to regulatory overreach or disproportionate responses to minor infractions, creating unnecessary burdens for compliant entities.
Limited Evidence of Need: The absence of a full impact assessment indicates a lack of comprehensive evidence demonstrating a clear justification for extending the FCA's powers to this specific area.
Unintended Consequences: Expanding regulatory influence could inadvertently create unforeseen challenges or negatively impact market liquidity, especially with respect to over-the-counter (OTC) derivatives.
The Treasury make these Regulations in exercise of the powers conferred by section 3 of the Financial Services and Markets Act 20231.
The Treasury have consulted the Financial Conduct Authority and Prudential Regulation Authority in accordance with section 3(6) of the Financial Services and Markets Act 2023.
The UK Treasury issued these regulations, authorized by Section 3 of the 2023 Financial Services and Markets Act.
Prior to implementation, the Treasury consulted with the Financial Conduct Authority and the Prudential Regulation Authority as per Section 3(6) of the same Act.
- Citation, commencement and extent
(1) These Regulations may be cited as the Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2025.
(2) These Regulations come into force immediately after both paragraph 47 and paragraph 48 of Schedule 2 to the Financial Services and Markets Act 2023 have come into force.
(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.
These regulations are officially titled the 'Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2025'.
They came into force once paragraphs 47 and 48 of Schedule 2 of the 2023 Financial Services and Markets Act took effect.
Their jurisdiction covers the entirety of the United Kingdom.
- Amendment of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 20172
(1) The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 20172 are amended as follows.
(2) In regulation 27 (FCA power to require information)—
(a) in paragraph (1)3, after “commodity derivative”, in both places it occurs, insert “or an applicable OTC commodity derivative”;
(b) in paragraph (2)4, after “commodity derivative” insert “or an applicable OTC commodity derivative”;
(c) in paragraph (3)5, for “15A” substitute “15A(1)”.
(3) In regulation 28(1) (FCA power to intervene)6, in sub-paragraph (a), after “commodity derivative” insert “or an applicable OTC commodity derivative”.
(4) In regulation 29 (interpretation of Part 3)7, in paragraph (2)—
(a) before the definition of “market operator”, insert—““applicable OTC commodity derivative” means an option, future or contract for difference which—
(a) relates, either directly or indirectly, to a commodity derivative traded on a trading venue established in the United Kingdom, and
(b) is not a financial instrument;
where “option”, “future” and “contract for difference” mean the investments of the kind specified in articles 83 (options)8, 84 (futures)9 and 85 (contracts for differences etc.)10 of the Regulated Activities Order;”;
(b) in the definition of “position”, for the words from “any economically equivalent” to the end substitute “for the purposes of regulations 27 and 28 any applicable OTC commodity derivative”.
This section details amendments to the 2017 Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations.
Specifically, it alters regulations 27 and 28, expanding the Financial Conduct Authority's (FCA) power to demand information and intervene.
The amendments broaden the scope of 'commodity derivatives' to include 'applicable OTC commodity derivatives', defined as options, futures, or contracts for difference indirectly or directly related to a commodity derivative traded on a UK venue but not classified as a financial instrument.
The definition of 'position' is also revised for regulations 27 and 28 to include this new type of derivative.
Jeff Smith Taiwo Owatemi Two of the Lords Commissioners of His Majesty's Treasury 14th July 2025
These are the signatures and official designations of the individuals who approved the regulations on July 14th, 2025.
They are identified as two Lords Commissioners of His Majesty's Treasury.
Explanatory Note (This note is not part of the Regulations)
These Regulations amend regulations 27, 28 and 29 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701) (“MIFI Regs”). Regulations 27 and 28 of the MIFI Regs are amended by paragraphs 47 and 48 of Schedule 2 to the Financial Services and Markets Act 2023 (c. 29) and these Regulations will come into force immediately after both of these paragraphs come into force.
These Regulations widen the scope of commodity derivative contracts about which the Financial Conduct Authority can require information and regarding which they may use their powers of intervention.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen. A de minimis impact assessment is available from HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ and is published with the Explanatory Memorandum alongside this instrument at www.legislation.gov.uk.
This explanatory note summarizes the regulations.
It reiterates that regulations 27, 28, and 29 of the 2017 MIFI Regulations are amended, explicitly stating that the changes expand the FCA's authority to request information and intervene regarding commodity derivative contracts.
The note also mentions that a full impact assessment was deemed unnecessary due to the anticipated minimal effect on public and private sectors, with a 'de minimis' assessment available from HM Treasury.
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