ESMA Launches Consultation Paper on Position Limits and Position Management in Commodity Derivatives

ESMA has launched a consultation paper intended to gather information on the ‘impact of position limits on liquidity, market abuse and orderly pricing and settlement conditions in commodity derivative markets’. 

This wording is taken directly from Article 90(1) of MiFID II which states, ‘Before March 2020, the Commission [European Commission], after consulting ESMA, present a report to the European Parliament and the Council on […] the impact of the application of position limits and position management on liquidity, market abuse and orderly pricing and settlement conditions in commodity derivative markets’. 

This consultation paper aims to build on the responses that have already been received to the call for evidence published in May of 2019. 

The consultation paper also seeks stakeholders’ views on some proposed changes to the legal framework, aiming ‘in particular at limiting the scope of commodity derivatives subject to position limits to key contracts, introducing a limited position limit exemption for financial counterparties and enhancing convergence in the implementation of position management regimes by trading venues’.

Stakeholders are asked to provide feedback by 8 January 2020. Relevant feedback will be incorporated into the final report to the EC by the end of March 2020.