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More MiFID II debate

The debate on MiFID II continues, as reported here on There are two streams of push-back:

Communication between ESMA and the European Parliament – As reported a couple of weeks ago the European Parliament has been critical of ESMA for not sharing working documents early enough, with a threat to cut ESMA’s budget. However since the article was written, reports have come out (see here on Smartbrief) that ESMA intend to be more open with ESMA going forward.

Push back by NGOs such as Oxfam, claiming that the process used to approve MiFID II has been dominated by the industry, from both a banking and commodity trading perspective, and that the proposals have been “watered down”.  The worry is around position limits and the range of levels available to regulators (10%-40%). There is a particular worry that the maximum level of 40% would be too high, and they wish for it to be lowered to 15%. Generally the levels are set at 25% and can be moved up and down by local regulators per contract. This is to allow for differences in markets and liquidity. For example a energy market which only has 3 or 4 regular players is going to find it hard to operate with a position limit of 10%. There are also other concerns mentioned such as the ability to divide positions across subsidiaries.

There is a difficult balance to keep between the different “sides” in this debate. On the one hand, some parties are raising legitimate concerns. On the other, the idea of the rules is to reform rather than diminish the market. On top of this, the rules span the different commodities, each of which has its own characteristics, liquidity, and participants.

The final Regulatory Technical Standards are awaited with interest.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.


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