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.