06 December 2016
Michael Wilkins

88964

Michael Wilkins - Fidessa

1Posts 2,492Views 0Comments

A calmer approach to position limits

28 November 2016  |  2493 views  |  0

As we edge ever-closer to MiFID II implementation, the position limits debate is once again underway in Europe. Under the new rules the UK regulator is required to impose position limits on all commodity derivatives listed on UK trading venues. In its Consultation Paper the FCA states: “The aim of the new regime governing commodity derivatives trading in MiFID II is to prevent market abuse and support orderly pricing and settlement to the benefit of those using the market.”

Some years ago, when the CFTC was looking at the same issue, memories of the financial crisis and the associated food and energy price spikes were still fresh in everyone’s minds. Hardly surprising, then, that the push for position limits was very much driven by a ‘peasants with pitchforks’ mentality, albeit ultimately diluted by commodity trading firms pushing back. It’s pleasing to see that the FCA appears to be taking a less impassioned approach by advocating for the firms themselves instead of individual consumers, recognising that “most users of these markets are financial services firms and those involved in the extraction, production, distribution, consumption and trading of the underlying commodities rather than individuals.” [p.17]

Let’s hope these good intentions don’t get distorted as the rule-making process trundles on.

 

TagsTrade executionRisk & regulation

Comments: (0)

Comment on this story (membership required)

Latest posts from Michael

A calmer approach to position limits

28 November 2016  |  2493 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

Michael's profile

job title Business Development
location London
member since 2016
Summary profile See full profile »
A member of Fidessa's derivatives team, I am focused on the multi-asset trading requirements of global and regional FCMs, money managers and commodity trading houses.

Michael's expertise

What Michael reads
Michael writes about
Michael's blog archive
November 2016 (1)

Who's commenting on Michael's posts