E.U. – ESMA Commodity Limits FAQ Updated

On 27 March 2018, ESMA updated its FAQs on commodity derivatives under MiFID II.

  • FAQ on position limits clarified circumstances under which less liquid contracts may
    receive bespoke limits, established by relevant national competent authority (NCA).
  • With a new approach to development and application of limits for spread contracts.
  • The spread positions are disaggregated, and the subsequent individual constituent
    positions were then added to the relevant overall position for the relevant contract.
  • FAQ on position reporting clarifies to which NCA positions in OTC derivative contract,
    which is economically equivalent to more than one ETD contract, must be reported.
  • When ETD contracts are not the same contract as defined in Article 5(1) of RTS 21.

Canada – IIROC Short Position Calculation

On 22 March, IIROC issued guidance on short position calculation.

  • Participants, Access Persons must file short position reports, per UMIR 10.10.
  • Follows IIROC Dec. 2017 notice on calculation and reporting of short position.
  • Calculate and file report of short positions in each listed and quoted security.
  • Report as of the 15th day, and the last day of each month, (calculation date).
  • Process to file short position report with IIROC, and the expectations on filing.

Aggregate Reporting

  • Report aggregate short position of security from holding in separate account,
  • Calculate short position from each account separately; and not net positions
    from more than one account even where accounts for same beneficial owner.
  • Inclusion of odd-lot short positions, in calculation of reported short positions.
  • Calculate short positions using settlement date positions, (not on trade date).

Convertible Securities

  • A short position in a listed or quoted security which is covered by the holding
    of a convertible or exchangeable security, is still considered as short position.
  • This short position must be reported until the convertible has been tendered,
    or account holder has issued irrevocable instructions to convert or exchange.


  • Effective date of guidance for short position reporting is November 30, 2018.

U.S. – Nasdaq Position Limit on ETFs

On 22 March, Phlx, MIAX proposed rule on position limits for ETFs.

  • MIAX amended rule 307 on position limits, as well as rule 309 exercise limits.
  • PHLX amended section (A) of exchange rule 1001, relating to position limits.


  • Increase position, exercise limits in options, on range exchange traded funds.
  • For options on the following ETFs: FXI, EEM, IWM, EFA, EWZ, TLT, QQQ, EWJ.
  • Said trade activity has been adversely impacted by the current position limits.
  • Limits have caused option trading in symbols to move from exchanges to OTC.
  • Are based on outstanding shares and trade volume of underlying stock or ETF.
  • Largest capitalized and most frequently traded had limit of 250,000 contracts.
  • Amendment would double the position and exercise limits, for stated symbols.
  • Such options to no longer be subject to standard position and exercise limits.


  • SEC approved rule, comment 21 days after publication in the federal register.

Japan – TSE Trading Contract Period

On 16 March, TSE expanded length of traded derivatives contracts.

  • Osaka Exchange will partially revise rules, to invigorate, enhance convenience.

Contract Months and Tick Sizes

  • The number of contract months of Nikkei 225 futures shall be increased to 19.
  • Also number of contract months of Nikkei 225 options shall be increased to 25.
  • Tick sizes for Nikkei 225 options will be set based on level of options premium.
  • English Agreement for setting up futures/options trading account.


  • These revisions are scheduled to be implemented from July 17, 2018.

India – SEBI Currency Derivative Limit

On 15 March, SEBI revised exposure limit on currency derivatives.

  • RBI revised the limits, beyond which market participants would be required to
    establish underlying exposure in the currency derivatives segment.


  • Allow domestic clients/ FPIs may take long or short positions without underlying.
  • Up to a single limit of $100m equivalent, across all currency pairs involving INR.
  • FPIs on short positions at all stock exchanges, contracts in FCY-INR under $100m.
  • In the event a FPI breaches the short position limit, stock exchanges shall restrict
    the FPI from increasing its existing short positions or creating new short positions.
  • When take long position in excess of $100m in all contracts in FCY-INR pairs, FPIs
    it will be required to have underlying exposure in Indian debt or equity securities.
  • Domestic clients may take positions in excess of $100m in in all contracts in FCY-
    INR pairs, subject to the conditions as were specified in the previous RBI circular.


  • Limits shall be monitored by stock exchanges/clearing corporations and breaches,
    reported to market surveillance team of Financial Markets Regulation Department.

India – SEBI Foreign Investor Custodian

On 13 March 2018, SEBI issued clarifications for category II FPIs, after queries.

  • Collective investment vehicle investing need to ensure know your client norms
    are met, client is not Indian citizen, nor resident in country of concern to FATF.
  • Client/ investor should not have opaque structure, or a bearer share structure.
  • Investment in India for insurance entity, must be undivided common portfolios.

Ireland – CBOI AIF Rulebook, AIFMD FAQ

On 14 March 2018, CBOI issued latest version of AIF Rulebook, and 29th AIFMD FAQs.

  • In FAQ section on Loan Originating Qualifying Investor AIF questions ID 1079, 1081,
    1117, 1118 deleted, question ID 1119 is amended, new question, ID 1128, included.
  • 1128 states that a QIAIF can’t invest in derivatives, other than for hedging purposes.

Hong Kong – SFC Deutsche Short Fine

On 13 March, HK SFC fined Deutsche Bank HK$8.3mn for short sales.

  • Fined Deutsche Bank and its wholly-owned subsidiary Deutsche Securities Asia.
  • Re short position reports, unlicensed activities and segregation of client money.

Short Positions

  • Breach of reporting requirements, led to a failure to report 792 short positions.
  • Short position at close of trading on HKEX, must be reported in set timeframe.

Research Reports

  • Published 49 research reports on futures contracts, without Type 5 registration.
  • Firm that distribute research on futures is required to be registered or licensed
    with the SFC to carry on Type 5 advising on futures contracts regulated activity.

Client Money

  • Did not segregate client monies in 117 incidents between January 2010 and 2014.
  • Required to pay client money into a segregated account, within day of receipt.


  • Under the resolution, SFC publicly reprimanded and fined bank total of $8.3mn.
  • SFC took into account self-reporting and cooperation in resolving SFC concerns.
  • Remedial measures to strengthen internal controls, to avoid similar recurrence.
  • Undertaking to provide report prepared by internal audit team after 12 months.

RRS Adds Serbia to Jurisdiction Coverage

Solutions Atlantic has released coverage for Serbia extending its Regulatory Reporting System Rules Library to 96 jurisdictions. This release comes on the heels of Serbia being added to Rulefinder, the source for regulatory intelligence provided by aosphere LLP. Investors in Serbia will find themselves subject to major shareholding disclosure obligations as well as sensitive sector limits.