Thursday November 16 2017

News Source: Global Disclosures

Focus: Position Limits (including MIFID II)

Type: General

Country: European Union




The European Securities and Markets Authority has published updated FAQs on MiFID II and MiFIR commodity derivatives topics. The topics include:

  • Position Limits;
  • Ancillary Activity; and
  • Position Reporting.

The following questions have been updated:

Position Limits

  • What is the definition of a lot for the application of Article 15(1)(a) and (b) (New and illiquid contracts) of RTS 21 to those commodity derivatives for which a lot, as defined in the contract specification by the trading venue, does not represent a standard quantity of the underlying across all maturities/delivery periods for that commodity derivative?
  • Will there be a different position limit for options and futures? If so, how should options be converted into futures for the application of position limits?
  • How is the position limits regime applied to the various underlyings listed in Annex I, Section C(10) of MIFID II?

Ancillary Activity

  • How shall transactions concluded on venues outside the EU be treated for the market size test computations under Article 2 of RTS 20?
  • How shall OTC transactions done by non-EU entities of an EU group with EU counterparties be counted for the market size test?
  • RTS 20 refers only to Article 360 of the CRR, while the ‘simplified approach for calculating regulatory capital requirements’ is contained in CRR Articles 357, 358 and 360. Is the text in RTS 20 self-contained or should firms refer to the whole of CRR?

Position Reporting

  • Where an NFE trades only, or partly, for hedging purposes, can every transaction be reported as being for speculative purposes?
  • Should an investment firm acting as broker and using a matched principal model be subject to position reporting?
  • Do end-of-day zero positions need to be reported?
  • Can position reporting pursuant to Article 58(2) be outsourced to another entity?
  • Do positions in C(10) instruments with an underlying which is not a commodity as defined in Article 2(6) of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 need to be reported?
  • In respect of which contracts does ESMA expect to receive weekly reporting data from trading venues under Article 58(7) of MiFID II in conjunction with ITS 4 and 5?

Click on the link above for further information.