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Updated MiFID II commodity derivatives Q+A

ESMA has released an updated MiFID II Questions and Answers document covering commodity derivatives related topics, which can be found here. There are 3 new answers:

  1. Ancillary activity Q10 – Page 24 – The capital base used in the capital test should be a worldwide number based on consolidated accounts.
  2. Ancillary activity Q11 – Page 25 – “C10” derivatives should be included in the test based on whether the underlying is in one of the appropriate categories.
  3. Position management controls – Q1 Page 30 – States that position management controls are part of a spectrum of controls to be used by venues and National Competent Authorities(NCAs).

The industry now awaits the setting of position limits, following the statement from ESMA that NCAs may publish draft limits without first going through a process where ESMA approve them (see here).

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on energy and commodity regulation. He has more than 20 years of experience in energy and commodity trading, credit, risk and financial technology. He has delivered a series of trading, credit and risk solutions to a wide variety of oil majors, power and gas companies and investment banks. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy 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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