FCA publishes position limits for commodity derivative contracts

The limits have been established by exercising our power of direction under Regulation 16 of The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (MIFI Regs) in accordance with Art.57 of MIFID II and the methodology set out in RTS 21[1].  The limits will apply from 3 January 2018 to positions held in the Spot Month and the Other Months' periods for each commodity derivative.

These limits have been set in accordance with the methodology set out in RTS 21[1] and published in advance of the publication of ESMA Opinions on the limits.  These limits may change in light of an ESMA opinion, or in the event that we decide it is necessary to do so.  This is in accordance with the statements of ESMA[2] and of the FCA[3] published on 28 September 2017.

The published limits apply to positions held in the named commodity derivatives, in aggregation with any associated mini, Balmo (Balance of Month) and mini-Balmo contracts where, the contracts have identical contractual specifications, for these purposes.  Where two contracts are based on an identical underlying commodity and the contracts are traded in different units (e.g. barrels vs. metric tonnes), the same position limit shall apply to positions in those contracts in aggregate.  Details of the contracts to be aggregated are set out on the FCA’s website.  This is done by way of FCA’s power of direction. In addition, any contracts which are the “same” contracts and those which are Economically Equivalent OTC contracts, as defined by Articles 5 and 6 of RTS 21 must be aggregated.

See further details of the commodity derivative contracts and the limits set on positions[4].

For the avoidance of doubt, whilst position limits can apply on the basis of aggregation of certain contracts, position reporting under Art.58 of MIFID II, as further set out in ITS 4 and MAR 10 of the FCA Handbook must be performed on a per-contract basis.