On May 3, the UK Financial Conduct Authority (FCA) published a document containing reporting instructions (Instructions) for trading venues and investment firms submitting position reports under the revised Markets in Financial Instruments Directive (MiFID II).
The FCA has created the document to provide instructions for entities that will submit commodity derivative position reports to it for processing. It advises firms to read the document in conjunction with the final draft of chapter 10 of its Market Conduct sourcebook (MAR 10), which was published in its March 2017 policy statement on the implementation of MiFID II (PS17/5) (for further information on the policy statement, see the April 7 issue of Corporate & Financial Weekly Digest).
The FCA states that its market data processor (MDP) system supports entities’ daily reporting obligations set out in Article 58(1)(b) and 58(2) of MiFID II. The Article 58(1)(a) obligation to make public a weekly report with the aggregate positions held by the different categories of persons for the various commodity derivatives traded on the trading venue (TV) will not be facilitated by the MDP system. The FCA will set up a dedicated inbox for firms to communicate these reports to it.
MiFID II requires TVs to report a daily breakdown of the positions held by all persons on that venue in commodity derivatives and emission allowances (or their derivatives). It also requires investment firms that trade in commodity derivatives or emission allowances (or their derivatives) outside a TV to provide the national competent authority (NCA) for the trading venue, where the contract is traded daily, with position reports for those instrument types and for their economically equivalent OTC (EEOTC) positions. This enables an NCA, such as the FCA, to aggregate positions and determine if a position holder is in breach of a position limit.
The MiFID II position limits and reporting regime for commodity derivatives will be effective on January 3, 2018.
A copy of the Instructions is available here