The Italian Law Journal | ItaLJ

3 THE ITALIAN LAW JOURNAL NO. 2 (2017)

Financial and Energy Contracts: New Demands for the Regulation and Categorization of Contracts 

by Camilla Ferrari

According to recent European regulations, certain kinds of contracts, mostly derivatives with an underlying energy product, risk being included, by virtue of the predominance afforded to the financial aspects, within the realm of financial contracts and consequently subject to the full extent of the legislation governing the latter. In other words, the systematic conclusion of those kinds of contracts in the course of business becomes a regulated activity. It therefore becomes a pressing matter to establish a criterion to distinguish between financial and genuinely energy (only) contracts.
In this respect, the dividing line between the financial contracts group and the energy contracts group may be their cause. Indeed, European Parliament and Council Directive 2014/65/EU of 15 May 2014 on markets in financial instruments (MiFID 2) identifies energy financial instruments as such on the basis of elements within their governing contracts that reasonably allow one to rule out that the transaction serves a commercial purpose. In light of the current or forthcoming regulatory framework, it is, or will be, possible to be exempted only as regards cases of real commercial purpose from the rigor of the applicable rules on the professional provision of investment services to the public. The energy subject matter of the contract, in and of itself, does not justify any such exemption.

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