ESMA MiFID II commodity derivatives position management controls


ESMA has published its first MiFID II commodity derivatives position management controls. What do you need to know about it? Is your brokerage compliant with MiFID II?

10 January, AtoZForex It is exactly one week today since the new EU financial markets regulation set has kicked in. On the January 3rd, 2018, all EU financial market participants have received the new framework to abide by. Yet, not many countries have managed to comply with the regulations in time.

ESMA MiFID II commodity derivatives position management controls

Following the fresh financial markets requirements release, the European Securities and Markets Authority (ESMA) has published the first badge of position management control. The official announcement from the EU regulator states:

“MIFID II requires Member States to ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives apply position management controls.”

In addition, the regulatory body has stated that investment firms or market operators that manage trading venues have to inform their national competent authority (NCA) in regards to the details of position management control. The NCA, in turn, will need to inform ESMA. Eventually, ESMA will publish and manage on its website a database with summaries of the position management controls.

The EU watchdog has stressed that this data will be updated by ESMA based on the information provided by NCAs.

Will low MiFID II Compliance reshape regulations?

According to the data from the EU Commission, just 11 out of 28 EU members have incorporated the MiFID II into their national laws. Moreover, ESMA has stated that EU investors are still able to use markets in the remaining 17 countries that have failed to comply with MiFID II in time.

The fresh set of regulations consists of more than 1.7 million paragraphs. Considering this fact, it is not surprising many market participants have faced challenges while trying to comply with the regulations.

As of now, the industry insiders believe the EU financial regulations will set a specific grace period, during which they will not crack down on the firms that are trying to comply. Yet, this is still unclear.

Others also say that MiFID II signals the arrival of a certain “shake-up” to the industry. Yet, given that the regulations took more than 7 years to complete, the framework landed in a relatively different environment to the one where it was created. This might mean that MiFID II might be reshaped in the upcoming years.

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