November 29, 2017

BaFin published the list of indicative position limits for commodity derivatives under the second Markets in Financial Instruments Directive (MiFID II). BaFin is the competent authority for all commodity derivatives contracts that are traded on a German market place, as well as economically equivalent bilateral counter derivatives (OTC derivatives). It determines the position limits and monitors their compliance.

Commodity derivatives can be subdivided into liquid and illiquid contracts. BaFin determines individual position limits on cash contracts based on the characteristics of the market. For illiquid contracts, however, a standard limit of 2,500 tradable units or 2.5 million securities applies. To provide market participants with guidance in preparing for the future position limit regime, BaFin has published a list of currently contemplated position limits for liquid contracts. The content of the list is not binding and can change at any time. BaFin will publish the position limits on January 03, 2018 by general order. This will take effect the next day.

As part of the implementation of MiFID II, position limits on commodity derivatives will be introduced as of January 03, 2018; this implies that there will be upper limits for holding derivatives whose underlying is a commodity. Neither individual companies nor corporate groups are allowed to consolidate positions that, in aggregate, exceed these thresholds.

 

Related Links (in German)

Effective Date: January 04, 2017

​Keywords: Europe, Germany, MiFID II, Position Limits, Commodity Derivatives, BaFin