E.U. – ESMA Commodity Position Limit

E.U. – ESMA Commodity Position Limit

On 9 April, EU ESMA issued opinion agreed position limits per MIFID.

  • Follows ESMA October 2017 opinion on FCA commodity position limits.

2018 Updates

  • ESMA opinions agreed position limit re feed wheat; jet kerosene; and gasoline.
  • Found proposed limits consistent with objectives of MiFID II, and methodology.
  • ESMA will continue to assess notifications received and issue opinions on them.
  • To ensure the position limits are set in accordance with the MiFID II framework.

Commodity Limits

  • MiFID II requires that all commodity derivatives traded on trade venues as well
    as economically equivalent OTC contracts, must be subjected to a position limit.
  • NCAs have to establish position limit with methodology for calculation by ESMA
  • For illiquid contracts, spot and other months' limits are set by default in RTS 21
    and amount to 2,500 lots, or 2.5mn securities issued for securitized derivatives.
  • Liquid contracts will be given bespoke position limits, set by the relevant NCAs.