On October 18, the UK Financial Conduct Authority (FCA) published the necessary forms for firms to apply for position limits exemptions under the revised Markets in Financial Instruments Directive (MiFID II).

A position limit is the maximum size of a position held by a person in any commodity derivative traded on a European Economic Area (EEA) trading venue and economically equivalent over-the-counter (EEOTC) contracts. MiFID II requires competent authorities, such as the FCA, to establish and apply such position limits.

Non-financial entities (NFEs) can apply to the FCA for a position-limit exemption for one or more contracts. Applicants will need to show that its position in a particular commodity derivative is directly risk-reducing in relation to its commercial activity.

The FCA states that any approved exemption will be an uncapped exemption for risk-reducing positions in the specific contract. However, the FCA will still monitor the reported positions against the basis of the information provided in the application form. If there is a significant change in the nature or value of the NFE’s commercial or trading activities, the NFE is required to submit a new application.

Further information and the relevant application forms can be found here.