Revocation of retained EU law Transitional amendments Amendments to the Markets in Financial Instruments Regulation (MiFIR) and the European Market Infrastructure Regulation (EMIR) Position limits regime
MiFID II provided that, in order to prevent market abuse, and to support orderly pricing and settlement conditions (including the prevention of market distorting positions), competent authorities should be empowered to establish position limits, with Article 57 of that Directive stipulating that those competent authorities must set and apply position limits. Today, the obligation on the FCA to establish position limits sits in Part 3 of the MiFI Regulations and catches both venue-traded commodity derivative contracts and economically equivalent over the counter contracts. Note that regulation 19(1) generally requires the FCA to establish position limits using Commission Delegated Regulation (EU) 2017/591 (as amended by the FCA during the onshoring process), which details the methodology for the calculation of position limits on commodity derivatives.
	Other than position limits, the regulation of commodity derivatives in the UK also involves the application of position management controls. FCA MAR 10.3.3, which, in short, applies to firms operating MTFs or OTFs, imposes requirements in respect of position management controls, the details of which firms must provide to the FCA. Paragraph 7BA of the Schedule to the Recognition Requirements Regulations sets out requirements for position management controls for investment exchanges operating trading venues which are (or wish to be) recognised by the FCA under section 290 of FSMA 2000. These requirements, which substantially mirror the FCA MAR 10.3.3 requirements, cover e.g. the monitoring of open interest positions and the power to require persons to terminate or reduce positions.
	The Act removes the universal requirement, under Part 3 of the MiFI Regulations, for position limits to be imposed in respect of commodity derivatives, and transfers the principal responsibility for the setting of position limits (and exemptions from those position limits) from the FCA to trading venue operators, while empowering the FCA to develop a framework to support and constrain operators in both setting and applying position limits. The FCA will also retain an exceptional power to impose position limits, or restrict positions, itself. In respect of position management controls, the Act gives the FCA the flexibility to require venues to set and apply position management controls as the FCA considers appropriate.