Schedule 2: Transitional amendments Part 4 – Amendments to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 Paragraph 46: FCA power to establish position limits
Sub-paragraphs (2) and (3) of paragraph 46 to the Schedule amend regulation 16 to remove the obligation for the FCA to establish position limits on commodity derivative contracts traded on a trading venue and economically equivalent over-the-counter (OTC) contracts. As amended, regulation 16 gives the FCA the ability to set position limits on contracts that are in scope of the rules developed under regulation 15A (the FCA’s rule-making power over trading venues).
	Sub-paragraph (4) introduces changes to regulation 16 to limit the FCA’s ability to use this power to circumstances where the FCA considers that doing so is necessary to advance at least one of its operational objectives (as outlined in 1B(3) of FSMA 2000). Sub-paragraph 4 also provides that position limits which the FCA sets directly take precedence over position limits imposed by venues (even if this is as a result of the FCA requiring the venue to impose such limits through the use of its rule-making power). This effectively creates an emergency power through which the FCA can intervene in the market to impose position limits directly, in instances where the limits imposed by venues in accordance with the FCA’s broader framework are insufficient to uphold its objectives.
	Sub-paragraph 5 removes various requirements which are no longer necessary as a result of the FCA no longer being obliged to impose limits on commodity derivative contracts.