In this post, we touch on some of the nuances that exist when monitoring holdings listed on the HKEX, including netting, aggregation, and calculating contract exposure.
With the impending implementation of MiFID II, many questions are still unanswered. Will there be differences between limits set by exchanges, CFTC and ESMA? If so, what exactly will they be?
Positions that are held by, or on behalf of, non-financial entities which are objectively measurable as reducing risk, must not be counted towards the limits and netted against positions which are not considered to reduce risk.
It has been made clear that an OTC derivative can be viewed as economically equivalent to a commodity derivative traded on a trading venue if it has indistinguishable contractual terms and conditions.
Our 22-page guide goes into detail about what the new rules mean for those trading commodity derivatives, and explains what firms need to do to avoid sanctions and penalties for non-compliance.
For the calculation of spot month position limits, exchange calendar information is required, typically to identify the point in time at which the spot limit becomes effective.
In the US, the CFTC makes provisions for the exchanges to set the specific position limits that can be accumulated by the market participant on their exchange. This power may be exercised by the exchange on a discretionary basis, allowing exchanges to have limits different to those set by the CFTC on 28 designated physical commodities.
FundApps' Position Limits service notifies users of approaching limits and makes it quick and straightforward to share relevant information with traders or other compliance teams.
Regulatory compliance listed as top priority
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