FX hedging (including currency futures) may fall within PSD2 ancillary services for payment institutions without requiring MiFID II authorisation, if the Advocate General’s interpretation is confirmed by the CJEU.
Essence
The Advocate General (AG) has issued an opinion in Case C-339/25 (Iulicris Recycling SRL v Ibanfirst SA) on whether payment institutions (PIs) and e-money institutions may offer foreign exchange (FX) hedging services without requiring a MiFID II license.
The AG concludes that FX hedging services, including flexible currency futures, can qualify as “closely related ancillary services” under PSD2 Article 18(1)(a), even where they fall outside spot FX transactions or the MiFID “means of payment” exemption.
If the Court of Justice of the European Union (CJEU) follows this opinion (which it often does), payment institutions may be permitted to offer a broader range of FX-related products without triggering MiFID licensing requirements.
A judgment is expected within approximately 3–6 months.
Background of the case
The dispute arose between Iulicris Recycling SRL, a Romanian company exposed to USD/RON currency risk, and Ibanfirst SA, a Belgian payment institution authorised under PSD2.
The parties entered into flexible currency futures to hedge FX exposure linked to payment flows.
The referring court asked whether such FX hedging instruments fall within PSD2 Article 18(1)(a), which permits “operational and closely related ancillary services” provided by payment institutions.
The core legal uncertainty is whether FX hedging:
- must fall within MiFID II exemptions (e.g. “means of payment” or “incidental activity”), or
- can be independently assessed under PSD2 as an ancillary payment service.
Legal question
Whether Article 18(1)(a) PSD2 permits payment institutions to provide FX hedging instruments (including currency futures), and whether such services must also comply with MiFID II exemption criteria.
Advocate General’s reasoning
Literal interpretation
The AG finds no textual basis in PSD2 to import MiFID II exemption criteria into Article 18(1)(a).
PSD2:
- does not reference MiFID exemption conditions
- does not incorporate MiFID “incidental services” tests
Conversely, MiFID II does not refer back to PSD2 either.
Conclusion: no direct cross-link between regimes in the wording.
Systematic interpretation
The AG rejects using MiFID II Article 2(1)(c) (incidental investment services exemption) to interpret PSD2.
Key reasoning:
- PSD2 “ancillary services” expand scope of permitted activities
- MiFID “incidental exemption” limits scope of regulated investment services
- importing MiFID limits would artificially restrict PSD2 and contradict its structure
PSD2 explicitly allows non-investment services (e.g. safekeeping, data processing), confirming it is not confined to investment-type services.
Teleological (purpose-based) interpretation
The purpose of Article 18(1)(a) PSD2 is to avoid requiring separate authorisation when FX is necessary to execute payment services.
From this perspective:
- FX services are not limited to spot conversions
- FX hedging may be included if functionally linked to payment activity
- key test is economic and operational connection to payment flows
Result: hedging instruments used to manage payment-related FX risk can fall within PSD2 scope.
Conclusion of the Advocate General
The AG concludes:
- FX services under PSD2 may include flexible currency futures used for hedging
- such services can qualify as “closely related ancillary services” under Article 18(1)(a) PSD2
- MiFID II requirements (including Articles 2(1)(c), 4, and 10 of the Delegated Regulation) do not apply to this classification
Implications
If confirmed by the CJEU:
- payment institutions may offer FX hedging products without MiFID licensing
- PSD2 ancillary services would be interpreted more broadly than previously assumed
- regulatory boundary between payments and investment services becomes more flexible in FX context
- potential expansion of PSP product scope beyond spot FX execution
Status
The CJEU judgment is expected within approximately 3–6 months.
About Emanuel van Praag
As a Counsel at Kennedy Van der Laan, Emanuel van Praag helps leading financial institutions navigate the complex and dynamic regulatory landscape. With over 15 years of experience in the financial industry, he has in-depth knowledge and practical insights into the legal and business challenges facing the sector, especially in the areas of Big Data, Open Finance, Payments (PSD2), Investment Services (MiFID II, AIFMD) and Crypto-Assets. Emanuel combines legal practice with academic research and teaching as a Professor of Financial Technology and Law at Erasmus School of Law. He publishes articles and books on the impact of emerging technologies on the financial sector and the law. He wrote a leading textbook on PSD2 and Open Finance.
