ESMA is issuing a public statement on its supervisory approach to position limits for commodity derivatives. The purpose is to clarify the application of position limits and coordinate the supervisory actions of National Competent Authorities (NCAs)...
pending the legislative change introduced by the
MiFID II Recovery Package for commodity derivatives. This legislative
change will start to apply in early 2022.
Position limits, under the amended legal provisions,
will only continue to apply to agricultural commodity derivatives and
critical or significant commodity derivatives. In addition, positions
that are objectively measurable as resulting from transactions entered
into to fulfil obligations to provide liquidity on a trading venue will
be exempted from position limits.
ESMA appreciates that position limits, which the co-legislators have
decided to delete to help the recovery from the COVID-19 pandemic, may
restrain the development of commodity derivative markets in the European
Union, but ESMA cannot disapply the law.
However, considering the upcoming legislative change and other
potential impacts on existing position limits, ESMA expects NCAs to not
prioritise:
- supervisory actions towards entities holding positions in commodity
derivatives, other than agricultural commodity derivatives, with a net
open interest below 300,000 lots; and
- supervisory actions towards positions that are objectively
measurable as resulting from transactions entered into to fulfil
obligations to provide liquidity on a trading venue as per MiFID II.
public statement
ESMA
© ESMA
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