The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017

FCA duty to establish position limits

16.—(1) The FCA must, by giving directions, establish position limits in respect of commodity derivatives traded on trading venues in the United Kingdom and economically equivalent over the counter contracts.

(2) The FCA must establish position limits under paragraph (1) on the basis of all positions held by a person in the contract to which the limit relates and those held on the person’s behalf at an aggregate group level in order to—

(a) prevent market abuse; and

(b) support orderly pricing and settlement conditions, which includes, but is not restricted to—

(i) preventing market distorting positions; and

(ii) ensuring convergence between prices of commodity derivatives in the delivery month and spot prices for the underlying commodity without prejudice to price discovery on the market for the underlying commodity.

(3) The FCA must determine if a position is held at an aggregate group level for the purpose of paragraph (2) in accordance with the relevant methods.

(4) Position limits established by the FCA under this regulation must be published in a manner the FCA considers appropriate.

(5) In this regulation—

“group” has the meaning given by Article 4.1.34 (definitions) of the markets in financial instruments directive; and

“the relevant methods” means the methods determined by regulatory technical standards referred to in sub-paragraph (b) of Article 57.12 (position limits and position management controls in commodity derivatives) of the markets in financial instruments directive and adopted by the Commission under the last paragraph of that Article.