Regulatory Alerts2025-07-02
Added · Updated
Ancillary Activities Test
This policy statement finalizes rules for the Ancillary Activities Test (AAT), which non-financial firms trading commodity derivatives use to qualify for the Ancillary Activities Exemption (AAE). Effective 1 January 2027, the new regime introduces three separate and independent tests: a new annual threshold test, and modified versions of the existing trading and capital employed tests. Firms can rely on the AAE by meeting the conditions of any one test. The new annual threshold test allows firms trading over-the-counter (OTC) cash-settled commodity derivatives below a £3 billion monetary threshold to qualify, replacing the market share test and excluding exchange-traded derivatives, while the trading and capital employed tests will have applicable thresholds set at 50%.