On January 8, MFA and AIMA jointly submitted a letter to ESMA in response to its consultation paper on position limits and position management. The Associations were very supportive of ESMA’s proposed modifications to the MiFID II position limits framework. In the letter, MFA and AIMA made the following points:
- The Associations welcome the potential change to the “Same Contract” provision to introduce a new approach to calculating limits that references the most liquid market where contracts that share the same characteristics trade.
- The Associations support ESMA’s conclusion that the position limit framework should not apply to securitized derivatives on the basis that this would be consistent with the treatment of commodity contract for differences and Exchange Traded Commodities.
- The Associations strongly support implementing limits on a narrower range of contracts. We believe this will greatly reduce the compliance burden associated with the rules, while improving the position for new contracts.
- In determining critical contracts for which limits will be set, the Associations believe the framework should consider whether those contracts have limits under other regimes.