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Mifid

MiFID II position limit developments

With the start of MiFID II less than 2 months away, there have been a few developments in the position limits and reporting streams of work, which apply to all entities who have position in within-scope commodity derivatives, whether they are an Investment Firm or not.

The Financial Market Law Committee (FMLC) has written this letter to ESMA asking for clarification on the application of the requirement to remain within the limit based on positions held “on an aggregate group basis”. The letter seeks clarification on the concept of “control”, on the basis that RTS 21 implies that such aggregation should be applied when the parent entity has control over the other entity’s position. The letter seeks clarification over the definition of control, and whether the ownership by a parent of a subsidiary is in itself enough to qualify for aggregation. ESMA and the FCA have recently published several limits (see here and here).

This article on the Reuters web site advises that Euronext  has announced the weekly publication “Commitment of trader” reports to qualified entities.

This article on the Reuters web site discusses the “escape” of oil traders from “MiFID II regulations”. It refers to the fact that many such companies are using commodity derivatives position to hedge, and such positions are exempt from the rules if a hedge exemption is granted (see here). However, the exemptions  are only available  to non financial entities who are exempt from MiFID II, which will often be on the basis of the Ancillary Activity exemption found in Article 2(1)j of MiFID II and detailed in RTS 20 (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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