ESMA confirms first three limits under new position limit regime
On Aug. 10, the European Securities and Markets Authority published three opinions on position limits proposed by France’s markets regulator regarding rapeseed, corn and milling wheat. The opinions confirmed that the limits are in line with the new framework for position limits established by revised Markets in Financial Instruments Regulation. Starting on Jan. 3, these limits will apply to net positions held in exchange-traded commodity futures and options as well as over-the-counter derivatives based on the same commodities. Under MiFID II, national competent authorities in the European Union are required to set position limits on commodity derivatives and notify ESMA before they are introduced.
On Aug. 29, the U.K. Financial Conduct Authority published a list of commodity derivatives traded on U.K. venues to which MiFID II position limits will apply. The list includes futures on agricultural commodities, metals and energy products that trade on ICE Futures Europe and the London Metal Exchange. The FCA is expected to start publishing the limits themselves in October, but they will not be finalized until reviewed by ESMA.
The FCA also published a Q&A document on the position limits and reporting regime for commodity derivatives under MiFID II. The document provides guidance on ancillary activities notifications, positions limits, position limit exemption applications, and reporting requirements.
