On December 19, 2016, the European Securities and Markets Authority (ESMA) published new questions and answers (Q&A) on commodity derivatives topics under the revised Markets in Financial Instruments Directive (MiFID II). The Q&A provides guidance on a number of areas relating to position limits and ancillary activities under MiFID II, including clarification that:

• position limits are applicable at all times, even for commodity derivatives traded outside normal trading hours of a trading venue;
• positions with different maturities for other months’ limits must be netted;
• non-EU entities may apply for an exemption from position limits in the same manner as an EU entity, and in accordance with draft regulatory technical standards (RTS) on the methodology for calculation of position limits (also referred to as RTS 21);
• position limits apply to net positions regardless of whether the net position is long or short;
• position limits apply at the individual person level and net positions held at the clearing level must be disaggregated; and
• the MiFID II exemption from authorization in Article 2(1)(j) is only available where the main business of a financial group is not the provision of investment services. Therefore, all legal entities dealing in commodity derivatives within a financial group that does not qualify must be individually authorized as investment firms under MiFID II.

ESMA has also published questions and answers covering transparency topics under MiFID II (see the edition of Corporate & Financial Weekly Digest from November 11, 2016 here for more information).

The Q&A can be found here.