- E.U. – ESMA Commodity Limits FAQ
On 19 December, ESMA issued FAQs on commodity derivatives per MiFID.
- ESMA also updated liquid commodity derivative contracts list, re limits.
- List now include position limits, ESMA opinion in relation to ICE Brent Crude contract.
- Position limits Q:15, on how spot month should be defined for contracts where there
are daily, weekly, quarterly or calendar as well as monthly variants of same contract.
- Spot month determination for the application of the spot month position limit should
be made by NCA, on basis of contract specification, the characteristics of the market.
- Position reporting Q:17 on who has to report to the trading venue, NCA where chain
investment firms, that have to comply with commodity position reporting obligations.
- Position reporting Q:18 on how investment firm clients should inform intermediaries
of the nature of each of their positions (hedge or speculation), i.e. for each position?
- Or should clients indicate all positions be deemed for hedging, non-hedging purpose?
- Position reporting Q:19 on how the position quantity field is reported for the contract
which relate to the delivery of the same underlying over the different periods of time.
- Position quantity held in contract reported same unit used by CA to set position limit.
- Position reporting Q:20 positions in daily or weekly contracts whose delivery period is
completely included in spot month should be reported as spot month positions, SPOT.
- Positions in weekly contract whose delivery period not completely included in the spot
month, ie contracts that straddle months, reported as other months’ positions, OTHR.
- Positions in quarterly and annual contracts whose delivery periods straddles the spot
month, and other months, should also be reported as other months’ positions, OTHR.