The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight this week issued interpretative guidance, clarifying commodity trading advisor registration requirements resulting from the European Union’s MiFID II research compensation provisions for investment managers.

The CFTC guidance provides that a futures commission merchant (FCM), swap dealer (SD), or introducing broker (IB) that receives separate compensation for commodity trading advice is not required to register as a commodity trading advisor, provided that the offered advice is “solely incidental” to the conduct of the FCM’s or SD’s business, or “solely in connection with” the operation of the IB’s business.

The interpretation was requested as a result of the EU’s Markets in Financial Instruments Directive II (MiFID II Directive), which will require certain investment managers to make separate payments for investment research services and execution services commencing Jan. 3, 2018. The interpretation, however, also extends to separate payments for commodity trading advice received by FCMs, SDs, and IBs outside of the requirements of the MiFID II Directive.

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