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ESMA report on MiFID II commodity derivatives regime – possible changes

ESMA has released this report summarising the responses received from the recent consultation focused on the MiFID II position limits regime (see here). The report also addresses some other topics including the Ancillary activity test.  It includes:

  • Comments on the effectiveness of the current position limits regime, with a great deal of feedback that it applies to too many contracts.
  • A recommendation that limits should only be applied to significant and critical contracts.
  • Comments on the removal of the “REMIT carve out” – feedback was overwhelming against removal.
  • A recommendation that the use of the hedge exemption for position limits by counterparties be permitted in some cases.
  • A recommendation that the Ancillary Activity Test be changed at level 1, triggered by issues related to Brexit.

The European Commission’s consultation on position limits (see here) is still open.

ESMA also issued a report on the weekly position reports published as part of the position reporting regime (see here).

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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