The European Securities and Markets Authority (ESMA) has published two sets of opinions and proposed changes to the MiFID II / MiFIR regulatory technical standards (RTS); namely regarding RTS 2 (non-equity transparency) and 21 (position limits). It has also published an accompanying letter to the European Commission, in which it states that “regarding the proposed amendments to draft RTS 21, ESMA is supportive of most of the proposals suggested by the Commission and has revised the position limits regime accordingly.”
In RTS 21, ESMA proposes to lower the position limits for derivatives ‘with an underlying that qualifies as food intended for human consumption’ to 2.5% – but a range between 2.5 and 35% is still available to competent authorities. In other words, the upside of the range has not been limited by ESMA. This is set out in Article 14.
On economically equivalent over-the-counter (OTC) contracts, Article 6 now reads that: “an OTC derivative shall be considered economically equivalent to a commodity derivative traded on a trading venue where it has identical contractual specifications, terms and conditions, excluding different lot size specifications, delivery dates diverging by less than one calendar day and different post trade risk management arrangements. ”
With regard to RTS 20 (Ancillary Activity) ESMA writes that an opinion is currently being finalised and that it will be issued later this month.
ESMA’s changes will now need to be reviewed by the Commission and adopted ahead of submission to the European Parliament and the Council of the EU for scrutiny.
View ESMA letter to Jonathan Hill regarding opinions on draft RTS 2 and RTS 21, 2 May 2016
View ESMA opinion on draft RTS2 non-equity transparency, 2 May 2016
View Annex – ESMA opinion on draft RTS 2 non-equity transparency, 2 May 2016
View ESMA opinion on draft RTS 21 position limits, 2 May 2016
View Annex – ESMA opinion on draft RTS 21 position limits, 2 May 2016