EU finalises Mifid II rulebook with derivatives caps


The announcement marks the completion of the overhaul of EU market regulation covering everything from bond pricing to payment for investment research, also known as Mifid II, which will apply to financial service firms across the bloc as of January 2018.

While approximately 28 rules were adopted during the course of 2016 as part of the Mifid II package, position limits around commodities sparked controversy during the legislative process according to an EU official.

The European Parliament’s committee on economic and monetary affairs expressed concerns that the limits weren’t strict enough, therefore prompting the EU’s executive arm to tweak them resulting in today’s final standard.

“We have listened to the concerns raised by the European Parliament and provided for stricter position limit standards whilst at the same time seeking to avoid unintended consequences,” said EU financial services chief Valdis Dombrovskis in a statement.

Position limits around commodity derivatives also exist in the US. The leaders of the Group of 20 pushed for regulation to avoid market manipulation of food prices via commodity markets.

However, the EU had to come up with ranges to take into account the diversity of the market, which has nearly 1,000 contracts compared with 28 in the US, an EU official said. The baseline limit is 25% and can range from 5% to 35%, depending on the contract.

“The initial proposals would have proven to be unworkable and might have caused considerable damage to commodity markets,” said Markus Ferber, vice chair of the EU Parliament’s economic and monetary affairs committee.

“The new proposals strike a good balance and will leave national competent authorities enough room for manoeuvre to apply suitable limits for contracts which lack liquidity.”

Write to Julia-Ambra Verlaine at

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