PART 2 AMENDMENTS OF THE PRINCIPAL ORDER

26 Amendments of the principal Order
In article 83 (options)—
(a) the existing text becomes paragraph (1);
(b) in paragraph (1)—
(i) at the end of sub-paragraph (c) omit “or”; and
(ii) at the end of sub-paragraph (d) insert—

“;
(e) subject to paragraph (4), an option to acquire or dispose of an option to which paragraph 5, 6, 7 or 10 of Section C of Annex I to the markets in financial instruments directive (the text of which is set out in Part I of Schedule 2) applies”

;
(c) after paragraph (1) insert—

“2 Subject to paragraph (4), options—
(a) to which paragraph (1) does not apply;
(b) which relate to commodities;
(c) which may be settled physically; and
(d) either—
(i) to which paragraph 5 or 6 of Section C of Annex I to the markets in financial instruments directive, the text of which is set out in Part 1 of Schedule 2, applies, or
(ii) which in accordance with Article 38 of the Commission Regulation (the text of which is set out in Part 2 of Schedule 2) are to be considered as having the characteristics of other derivative financial instruments and not being for commercial purposes, and to which paragraph 7 of Section C of Annex I to the markets in financial instruments directive applies.
3 Subject to paragraph (4), options—
(a) to which paragraph (1) does not apply;
(b) which may be settled physically; and
(c) to which paragraph 10 of Section C of Annex I to the markets in financial instruments directive (read with the Commission Regulation) applies.
4 Paragraphs (1)(e), (2) and (3) only apply to options in relation to which—
(a) an investment firm or credit institution is providing or performing investment services and activities on a professional basis,
(b) a management company is providing, in accordance with Article 5(3) of the UCITS directive, the investment service specified in paragraph 4 or 5 of Section A, or the ancillary service specified in paragraph 1 of Section B, of Annex I to the markets in financial instruments directive, or
(c) a market operator is providing the investment service specified in paragraph 8 of Section A of Annex I to the markets in financial instruments directive.
5 Expressions used in paragraphs (1)(e), (2) and (3) and in the markets in financial instruments directive have the same meaning as in that directive.”

.