On March 19, the European Securities and Markets Authority (ESMA) published a statement announcing a new Directive relating to its supervisory approach to position limits for commodity derivatives under the Markets in Financial Instruments Directive (MiFID II) (the Statement).

The Directive will amend MiFID II and is expected to help the European Union’s economic recovery from the COVID-19 pandemic by reducing the scope of commodity derivatives that are subject to position limits. The new provisions will start to apply in early 2022.

In preparation for the new provisions, ESMA expects national competent authorities to not prioritize their supervisory actions relating to:

• entities holding positions in commodity derivatives, other than agricultural commodity derivatives, with a net open interest below 300,000 lots over a one-year period; and

• positions that are objectively measurable resulting from transactions entered into to fulfil obligations to provide liquidity on a trading venue as referred to in Article 2(4) of MiFID II.

ESMA’s statement announcing a new Directive to its supervisory approach to position limits for commodity derivatives under MiFID II.