“Spot” the difference

The European Commission has published the responses to its public consultation on FX financial instruments. The April 2013 consultation sought to gauge stakeholder opinion concerning the distinction between an FX financial instrument and a spot FX contract.

This delineation has significant implications; a contract which is considered a financial instrument is subject to MiFID requirements. Furthermore, the MiFID definition is used as a reference in other legislation, such as EMIR, adding to the importance of clarification. The consultation aimed to establish a common EU definition, ensuring adequate and consistent application of FX activity regulation.