The draft RTS include proposals on the application procedure for position limit exemptions, a methodology to determine position limits and position management tools for trading venues, which will contribute to stable and orderly commodity derivative markets at a time of heightened scrutiny.
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published its Final Report
on draft Regulatory Technical Standards (RTS) for commodity derivatives
under the MiFID II Recovery Package.
Under the MiFID II Recovery Package, position limits
will only continue to apply to agricultural commodity derivatives and to
critical or significant commodity derivatives defined in Level 1 as
commodity derivatives with a net open interest above 300,000 lots over a
one-year period. As part of the implementation measures of the new
framework, ESMA and the national competent authorities have also
separately agreed on a procedure to ensure convergence in the
calculation of the open interest and the determination of whether a
commodity derivative qualifies as critical or significant.
The draft RTS on the application procedure for the new position limit
exemptions and the methodology for position limits have been
incorporated into a broad new draft technical standard, together with
some amendments to the existing framework suggested by ESMA. The new
draft RTS 21a will repeal the existing RTS 21.
The new draft RTS on position management controls provides additional
tools for market monitoring by trading venues trading commodity
derivatives. The establishment of accountability levels means that
market monitoring is being improved at a time when the reliability and
efficiency of commodity derivative markets is facing heightened
The European Commission has three months to decide whether to endorse
the draft technical standards. The revised MiFID II regime for
commodity derivatives will apply at the end of February 2022.
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