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ESMA releases new MiFID II answers on position limits, the ancillary activity test and others

ESMA has released a series of updated documents on MiFID II in the past days:

Firstly, an opinion document (here) on whether commodity derivatives positions on third country venues are classified as “Economically equivalent OTC” contracts to positions on EU trading venues for the purposes of calculating position limits. The opinion states that so long as the positions are on third country venues which are recognised as having “similar features” to an EU trading venue, the positions are not OTC and therefore do not have to be aggregated into the limits. ESMA will publish and maintain a list of relevant venues.

Secondly, an updated Questions and Answers document (here) on Commodity Derivatives, in particular on position limits and the ancillary activity test.

In terms of position limits, there is an updated to the question on lots sizes for gas and power positions where a new paragraph has been added to the end of question 2 on page 8. There is also reference to the above opinion.

Several new answers have also been added on the Ancillary Activity test, in particular on the subject of who has to file an exemption (if used), to which NCA, and also the transitional arrangements, for example stating that exemption applications must be filed in the first instance by 3rd January 2018, and giving some direction as to how to handle the scenario where further calculations using new data cause the status to change.

Thirdly, ESMA have issued another opinion paper (here) on determining which transactions on third country venues are covered by the MiFID II transparency rules.

There have also been updates to other documents, such as the Market Structures Q+A (here), an update to the transparency Q+A (here) which includes a definition of an Exchange of Physical on page 22, some questions on systematic internalisers and also on data reporting service providers.




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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