OREANDA-NEWS. The board of EU financial regulator Esma has put off agreement on rules for commodity trading exemptions and pre-trade transparency under the new Markets in Financial Instruments Directive (MiFID 2).

The Esma board of supervisors held talks in Paris into the late evening yesterday, and had been expected to finalise the MiFID 2 rules, known as regulatory technical standards (RTS), and send them to EU institutions. The rules were originally due to be submitted to the European Commission in June 2015.

Esma chairman Steven Maijoor, speaking at an ISDA Europe conference on 23 September, had expressed confidence that the rules would be submitted by the end of this month. They had been due to be made public on 28 September.

The regulator and EU policymakers have come under pressure from market participants and member states to return to the drawing board on a number of key provisions.

Esma is developing tests to determine whether firms trading in energy and other commodities will be subject to the new MiFID 2 rules. The regulator proposes setting two independent thresholds, one on capital employed for derivatives trading activities defined under MiFID 2 , and the other on a company's share of derivatives trading activity in the EU for each class of financial assets.

Commodity trading firms, utilities and energy companies are pushing for alternative thresholds in a bid to recapture the original spirit of the MiFID 2 legislation and to recognise that the "real economy" of physical commodities has marked differences from financial markets, products and institutions.

Shell's response to disproportionate rules under MiFID 2 "may include taking appropriate action to mitigate the impact to our trading business so we can operate in the most cost-effective way," Shell Trading and Supply executive vice-president Mike Conway said this month. Shell is understood to have made clear to EU policymakers that MiFID 2 rules could lead it to shift trading activities out of the EU.

In a letter dated 25 August, France, Germany and the UK said Esma's proposals did "not reflect the agreement" reached between the European institutions on the primary MiFID 2 legislation. The letter added that these issues should be addressed before the relevant RTS and associated secondary legislation are submitted to EU member states in the Council for approval.

Once formally adopted by the commission, member states will have to fully transpose the new rules into national legislation by 3 July 2016, with full enforcement throughout the EU from 3 January 2017.