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The FCA publishes policy statements and starts a further consultation

The UK’s Financial Conduct Authority (FCA) has published a “policy statement” on MiFID II which offers “near final” rules on several topics including some that will be on interest to those in the commodity and energy markets who do not require full authorisation under MiFID II. The press release can be found here and the document can be found here.

Position limits, monitoring and reporting

The “Commodity derivatives” section which starts on page 50 covers position limits, position management and position reporting, which is outlined in RTS 21. There is confirmation that non financial companies are not obligated to submit exemption applications if they are not needed. The question of whether non investment firms are obligated to perform position reporting is raised.

The second part of the document outlines rule book changes and includes a definition of “Economically equivalent OTC contracts” on page 100(7). Position limits and reporting changes start on page 298(205). Page 305(212) outlines who is responsible for which part of position reporting. Section 10.5 on page 310(217) talks about notification of breaches, for firms in different categories.

Other topics in the policy statement

The policy statement covers a large selection of topics including those relating to the operation of MTFs and OTFs, a confirmation that the pre-trade transparency waiver will be applied in full by the FCA and also an acknowledgement that the taping requirements may not always be appropriate. A fuller outline is available here on the Norton Rose Fulbright web site. The FCA intend to publish another policy statement in June.

Fifth MiFID II consultation

The FCA has also published this fifth consultation on MiFID II. It includes some items on the delegation and applicability on position reporting and associated reference data. There are other topics, including on conduct of business and penalties and enforcement. Norton Rose Fulbright summarise the entire document here.

Moving forward

There are still many topics to be answered under MiFID and some will likely be addressed in Level 3 Questions and Answers document from ESMA. Several document were issued over the weekend and it is hoped that one relating to the commodity and energy market will be issued in the near future.

ETR Advisory clients subscribing to the Regulatory Support service will receive a fuller analysis of these documents.


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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