On October 5, 2018, ESMA published an Opinion (dated September 24, 2018) on position limits for U.K. Natural Gas Contracts, for the purposes of the position limit regime established by the revised Markets in Financial Instruments Directive. MiFID II and its secondary legislation establish the position limits regime for commodity derivatives. For illiquid contracts, the position limits are set in the legislation. However, where contracts are liquid, position limits are set by the relevant national regulator and notified to ESMA. Secondary legislation under MiFID II sets out Regulatory Technical Standards for the methodology national regulators should use and the factors they should consider when setting position limits.
The U.K. FCA notified ESMA in February 2018 of the position limits the FCA intends to set for U.K. Natural Gas commodity futures and options contracts. In its Opinion, ESMA confirms that the spot month position limit and the other months' position limit are consistent with the objectives of MiFID II and compliant with the methodology established by the relevant RTS. ESMA has also published two other opinions on position limits for: (i) Swiss Power Base contracts; and (ii) the Phelix DE/AT Base Power contract.
The Opinion on U.K. Natural Gas Contracts is available at: https://www.esma.europa.eu/sites/default/files/library/esma70-155-1538_opinion_on_position_limits_on_uk_natural_gas_contracts.pdf and all of ESMA's Opinions issued under MiFID II are available at: https://www.esma.europa.eu/search/site/mifid%20II?f%5B0%5D=im_field_document_type%3A48.
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