Last week ESMA updated the opinion document on determining third-country trading venues for the purpose of position limits under MiFID II. The new document can be found here.

The document relates to whether positions on third country venues (i.e. outside the EU) contribute to position limits under MiFID II. This could occur if the position on the third country venue is considered to be an “Economically Equivalent OTC” position (EEOTC), i.e. it represents a position that is considered the same as a contract in the EU on which a MiFID II position limit has been placed. If the third country position is an EEOTC it will contribute to the “base” EU contract’s limit utilisation.

In 2017, ESMA issued its first opinion document on this topic (see here).  In it, ESMA gave the opinion that in order for a third country position to be considered “EEOTC”, the position must be considered “Over The Counter” (i.e. OTC). It then went on to say that provided the third country venue was recognised under this, rule, the position would be “on venue” and hence not “OTC”. As a result, the position cannot be “EEOTC”.

This update to the opinion reiterates this view, and lists the third country venues which are currently recognised under this rule.