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ESMA reviews the impact of position limits on liquidity, market abuse, orderly pricing and settlement conditions in commodity derivative markets.

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The European Securities and Markets Authority (ESMA) together with the European Commission (EC) is performing a review on the impact of position limits on liquidity, market abuse, orderly pricing and settlement conditions in commodity derivative markets. As a result, it has opened a Consultation Paper on 5 October and is now seeking stakeholders’ views on proposed amendments to the legal framework.

The consultation paper analyses the impact of position limits on market abuse, orderly pricing and settlement as well as the impact the position limit regime has had on less liquid commodity derivative contracts. The consultation paper is also seeking stakeholders’ views on proposed changes to the legal framework aiming at limiting the scope of commodity derivatives subject to position limits to key contracts, introducing a limited position limit exemption for financial counterparties and enhancing convergence in the implementation of position management regimes by trading venues.

The paper is also seeking stakeholders’ views on an amendment to the quantitative thresholds that trigger the publication of weekly position reports by trading venues so that more transparency is available for commodity derivative contracts traded in the EU27.

Feedback is to be provided by 8 January 2020. 

By the end of March 2020, ESMA intends to incorporate the feedback into a final report to the European Commission on the impact of position limits and position management controls on commodity derivatives markets and to finalise the technical advice on weekly position reports.

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